NEW YORK The introduction of a new trade barrier on
ferrous and nonferrous scrap metal by the Indian government has
sparked outrage among U.S. exporters and Indian importers who
expect volumes shipped to India to drop significantly as a
result of the new fees.
In two separate customs notifications, Indias finance
ministry announced May 8 that effective immediately it would
impose a 2.5-percent customs duty on imports of scrap iron,
steel and aluminum and a 4-percent duty on imports of brass
scrap. Until May 8, India levied no import duties for any of
these scrap metals.
In a note sent to its members, the Metal Recycling Association
of India (MRAI) said it was shocked and
disappointed with the implementation of the duties.
MRAI is extremely disappointed with the changes in duty
structure that will negatively impact the domestic steel
industry (especially the induction and electric-arc furnaces)
and the domestic nonferrous industry, the Mumbai-based
According to the association, India does not domestically
generate enough scrap metal to meet its melting requirements
and is therefore reliant on imports.
A source at one of Indias largest scrap companies told
AMM that he calculates the 2.5-percent import duty on
ferrous scrap will raise landing costs by about $11 per tonne.
He claimed Indian officials introduced the duties to
safeguard sponge iron manufacturers in India.
This is ridiculous on the governments part to force
the use of more sponge iron, which is ultimately hampering the
life of furnaces and increases the cost of power because sponge
gives an average yield of 75 percent while shredded or heavy
melt scrap gives a 95-percent yield. (Steel scrap) saves
furnace life as well as power, he alleged.
Both exporters and importers said it was still unclear what the
specific impact of this new trade barrier will be.
Logic would tell you that it will either reduce the
amount being imported or scrap would have to be cheaper,
said one U.S. scrap exporter, while a second exporter said he
thinks the regulations will negatively affect imports into
India of ferrous scrap.
There is strong competition for containerized ferrous
scrap from the U.S. East Coast, as well as Northern Europe, and
the countries like South Korea, Vietnam and other Asian nations
will have an enhanced advantage if the duty stands. Likewise on
bulk shipments with Turkey and other Mediterranean and Middle
Eastern nations receiving an advantage, he said.
A scrap broker based in India said it is unclear who will bear
the extra costs that these duties may incur.
This means an additional cost of $10 to $15 per tonne
(for ferrous scrap). So who bears this? Indian mills will no
doubt try and reduce their purchase prices in the short term,
(I am) not sure how sellers are going to react, he said.
A source at another U.S. exporter, who is also a board member
of the Institute of Scrap Recycling Industries (ISRI), said as
an ISRI board member we subscribe to the philosophy of
free and fair trade. This does not meet that criteria. It is
disappointing to say the least. It speaks of protectionism and
The source said an estimated $10-per-tonne added cost
could easily be a deal-breaker on some ferrous deals. It
will certainly not stop activity, but will have an impact where
there is an existing flow of material. I hope we see India
reconsider this move.
In its letter, MRAI concluded that it is hopeful that the
government of India will revert back to the earlier duty
structure at the earliest and in fact agree to the demands of
metal recyclers in India that have been requesting for duties
on all grades of metal scrap to be abolished with immediate