The Indian Steel sector has been demanding to reduce import duty on Scrap (2.5%) owing to scarcity of Iron ore in the country. However, in the Union Budget 2014-15 presented by Indian Finance Minister today, duty on Scrap import remain unchanged at 2.5%.
Indian Steel mills are anticipating revival in demand after Nitin Gadkari, transport minister, proposed to garner INR 100 billion for highways development in 2 years.
At present, India is not able to meet the Iron ore demand owing to dearth of the key raw material, therefore it is expected that Scarp imports will pick up in the near future. For this, steel sector is demanding to ease import duty on Scrap.
Scrap imports have fallen drastically from last fiscal year. In FY14, India had imported 4.5 MnT of Scrap from China, Taiwan & Korea against 7 MnT in FY13, as per SteelMint data. Fear of ore prices shooting up owing to rise in steel demand may not hold true as sources said rising Scrap import will help control ore prices.
After the Supreme Court’s stay order on suspension of mining operations in Odisha, Iron ore mining in India continues to face hurdles. Scrap is a close substitute for the raw material, which India largely imports.
Managing Director of Tata Steel, T.V. Narendran quoted in media, “Mills’ excitement for owning Iron ore in India has come down. Rise in Scrap imports likely to keep ore prices under check.”
Despite mining embargo, Scrap imports plunged to 42.5% owing to slowdown in steel demand along with production. As per the Steel 360 data, India’s Iron ore production was 144 MnT in FY14 compared to 136 MnT in FY13, which is likely to remain at the same level of 144 MnT in FY15 owing to mining ban in Odisha & Jharkhand.
Amitabh Mudgal, President, Marketing & Corporate Affairs of Monnet Ispat mentioned that once the investment in infrastructure projects begin, raw material demand will increase accordingly.
The declaration of Union Budget 2014-15 today has confirmed that the import duty on Scrap will remain unchanged at 2.5%.