Most of the mills using ferrous scrap to make steel in India are located in Maharashtra and Gujarat, on the western coast of the world’s most populous nation. They are close to the ports that bring in millions of tonnes of scrap annually to feed the growing number of mills.
Ferrous scrap imports doubled in the past decade from 5.6-million tonnes in 2013 to 11.76-million tonnes by 2023, according to an S&P Global report. Since 2021 these imports have been exempted from a 2.5% tariff in India. The exemption remains until March 2026.
This is part of a push to secure ferrous and other valuable nonferrous inputs for processing and recycling, which is at the centre of the Indian industrial strategy. The same duty reduction was instituted in the 2024/25 budget on ferronickel and molybdenum, raw materials used in steel fabrication.
Delivering the budget speech four weeks ago, Indian finance minister Nirmala Sitharaman announced the reduction of import tariffs on further nonferrous wastes and scrap of critical minerals (including antimony, cobalt and lithium-ion batteries), the stuff that is going into a growing list of downstream applications.
This ranges from lead alloys (stiffened by antimony) for use in bullets to cobalt material used in the making the lithium-ion batteries that power electric vehicles. Sitharaman felt such a measure would be a “major fillip to their processing, especially by micro, small and medium-sized enterprises”.
As the world’s second-largest seaborne importer of ferrous scrap after Turkey, India’s steel strategy is targeting more than 300-million tonnes of crude steel capacity (nearly double its present capacity) by 2030, and to ensure electric arc furnaces belt out half of India’s crude steel by 2047.
These furnaces, using a combination of scrap and sponge iron, make up under a third of all Indian crude steel production. They also constitute under 30% of global steel output, making scrap sourcing a critical consideration in any national steel strategy engaged with any meaningful programme of decarbonisation.
In 2013, SA (followed by the United Arab Emirates (UAE) and UK not too far behind) was the largest national source of India’s scrap imports, with just under 1-million tonnes of ferrous scrap sent to India that year. The volumes have declined a decade later to just under 140,000 tonnes by 2023, in no small part due to the introduction of export trade restrictions.
The introduction of a price preference system (PPS) — and later an export tax in SA — has seemingly accounted for the decline in scrap exports to India. This environment has extended economic “rents” to mini-mills with arc furnaces of varying capital kit and scale, by shifting these away from collectors, aggregators and exporters of scrap. This is not unique to SA. In 2023 the UAE also put a specific 400-dirham ($110) per tonne export duty on ferrous scrap.
However, in our case the consideration of the extent of the PPS “discount differential” (or its arbitrage-reducing relation to the export tax) to international prices is something receiving due consideration within the government. Indeed, global scrap prices are softer now than in 2013, yet early indications are that supply is becoming tighter in key importing nations, which may push prices upward.
Furthermore, it is important to recalibrate in line with the original intent by considering conjunctural price and other differences between now and 2013. That makes feedstock availability across both ore and scrap inputs to steelmaking, a matter of considerable policy significance.
As Sitharaman began part B of her speech on proposals relating to rationalising the tariff structure and other duty anomalies, one was reminded that it has been three years since India disbanded its Tariff Commission, opting for a system of executive decisions in line with the budgetary cycle rather than the case-by-case approach we adopt in SA.
Using the budget process as an assertive arena for signalling on how the tariff schedule (alongside other tax measures) will be used for industrial policy. New Delhi’s signal is clear: scrap is a critical raw (and reusable) material to its industrial and decarbonisation ambitions. It is a signal Pretoria needs to watch closely.
• Cawe is chief commissioner at the International Trade Administration Commission. He writes in his personal capacity.
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