COMMODITIES 2025: Indian shredded scrap prices may rise on steel demand, import curbs

This is part of the COMMODITIES 2025 series where our reporters bring to you key themes that will drive commodities markets in 2025.

Stronger demand for domestic finished steel due to higher infrastructure spending and possible safeguard restrictions on flat steel imports could support Indian imported containerized shredded scrap prices in 2025, market participants said.

The Platts assessment for imported containerized shredded scrap weakened in 2024, averaging $398.20/mt CFR Nhava Sheva, declining from $429.50/mt CFR Nhava Sheva in 2023. Platts is part of S&P Global Commodity Insights.

The price fell due to a slowdown in infrastructure projects ahead of the 2024 Indian general election, which lasted from April 19 to June, and slower finished steel consumption amid cheaper imports from Asian countries like China.

Imports declined to 6.30 million mt from January to August 2024, against 7.25 million mt during the corresponding period in 2023, according to the latest data from the Ministry of Commerce.

Market players expect import scrap prices to rise at the start of 2025, driven by tight domestic availability of good quality scrap.

"There is still a scarcity of good quality scrap in the [domestic] market, and hence people are still buying [imports]," a mill source said. "Shredded scrap gives very good yield in furnaces, which is why it is preferred as a raw material."

Some mills in western India prefer hot-briquetted iron (HBI), a type of direct-reduced iron (DRI), as a more competitive alternative to scrap. The yield from using HBI in furnaces is lower, around 83%-85%, while that from using shredded scrap is over 90%.

"Iran-origin HBI is coming to India in bulk shipments, and the price is around $290-$295/mt CFR levels," a trader said. "If scrap prices remain high, Indian end-users often look for cheaper alternatives like DRI or sponge iron."

The daily pellet-based Indian domestic direct reduced iron spot price assessment on an ex-works Raipur, Chhattisgarh basis, averaged Rupee 26,059/mt ($308.95/mt) ex-works Raipur through Dec. 31, 2024, following its launch Sept. 23 last year.

Growth factors

Market participants anticipate government spending on infrastructure to accelerate in the final quarter of the financial year that ends March 31, potentially boosting steel demand.

India's federal finance ministry allocated a budget of about $130 billion for infrastructure development in the 2024-25 financial year.

"Prices [for imported containerized shredded scrap] should move up in 2025 as there will be growth in terms of infrastructure," another Western Indian mill source said. "2024, was anyway impacted by one major factor -- the general elections."

Indian steelmakers also expect the government to announce a safeguard restriction against cheaper imports of finished steel in the first half of 2025, with a positive impact on domestic finished steel sales.

"The most anticipated safeguard restriction is likely to come into effect in the fourth quarter [of the financial year ending March 31] and that will be a good boost for finished steel demand," a mill source said. "Cheaper imports from countries like China have significantly impacted finished steel demand this year."

Platts assessed the price of domestic rebar at an average of $558.85/mt ex-works Raipur in 2024, down from an average of $605.05/mt ex-works in 2023, as demand slowed. The price of domestic hot-rolled coil averaged $613.90/mt ex-works Mumbai in 2024, weakening from $694.30/mt ex-works Mumbai in 2023.

Limiting factors

Possible trade tariffs under US President-elect Donald Trump could impact finished steel trade flows, exchange rates and global container freight rates.

The Indian rupee depreciated to an all-time low in 2024 against the dollar to Rupee 85.61 on Dec. 31, according to Platts forex data, because of a widening trade deficit. This also impacted the Indian buying appetite for procurement.

Container freight rates had risen in 2024 due to a shortage of containers, as shippers undertook longer voyages via the Cape of Good Hope to avoid Houthi attacks on vessels along the Red Sea.

Container freight from the UK to India declined to $1,525-$1,550/TEU, equivalent to $55.45-$56.40/mt, including inland haulage, as of Jan. 2, from the $1,650-$1,800/TEU range, equivalent to $60-$65.45/mt, including inland haulage, on Aug. 5.

"Container freight rates are likely to cool off in 2025 unless some other geopolitical factor comes up or Trump announces some trade measure when he assumes office that impacts shipment," a Singapore-based trader said.

Indian scrap importers will need to comply with the new European Union Waste Shipment Regulation, which will impact non-Organization for Economic Co-operation and Development countries importing scrap from the EU. As the largest seaborne ferrous scrap importer ahead of India and an OECD member, Turkey could benefit from this regulatory burden on Indian scrap importers.

According to the new Waste Shipment Regulation, importers in non-OECD countries such as India must request authorization from the European Commission to import EU non-hazardous waste, including ferrous scrap, for recovery by Feb. 21, 2025. Failure to receive approval could prevent Indian importers from procuring ferrous scrap from the EU starting May 21, 2027.

Europe is the largest regional scrap exporter in the world.