The four-year-long deliberation on India’s auto scrappage policy seems to be bearing fruits. India’s road and transport minister Nitin Gadkari recently announced that this policy could be rolled out in a month. The scrappage policy, which is said to place the onus of incentivization on the auto sector, is a step towards greener steelmaking in India.
Aiding India’s efforts towards organizing the scattered recycling sector is the Tata Steel’s efforts, be it their app FerroHaat, a virtual marketplace for scrap traders, or setting up a steel recycling plant at Rohtak, Haryana. Against this backdrop, Davis Index spoke to Yogesh Bedi, Chief, Steel Recycling Business, Tata Steel, to understand how the scrap market in India could pan out in the coming years.
Tata steel with its new plant will give an impetus to recycling in India. Henceforth, how will it help quicken the pace for India’s thrust towards recycling?
The overarching benefit of steel recycling is that of sustainability. Steel manufactured through the recycled route lowers carbon emissions, energy consumption, and resource utilization. It is a big step for the country to move towards sustainable steel production. It also entails lower costs- Capex and Land, allows a modular and de-integrated set-up, closer to the raw material as well as the market.
It would provide a much-needed raw material fillip to the steel industry by providing quality processed ferrous scrap to end-users including EAFs, IFs, foundries, fabricators among others. With quality scrap available domestically, it would significantly reduce the dependence on Imports, reduce the drain of forex, and the lead time.
Steel recycling is a global trend. Countries in Europe as well as the US, UK, and more recently China are increasing the share of steel production through scrap recycling.
Even India’s National Steel Policy envisages an annual 300mn mt steel production in India by FY30. Steel recycling is expected to play a pivotal role in attaining this ambition with ~50pc of capacity contribution from the secondary steel sector
In India, the input cost, especially scrap prices have been going up for the past few days. But at the same time, the rise in finished steel prices have not maintained the same pace as the raw material. How can we expect the market to be in the coming days?
Such aberrations keep occurring in commodity trades and the reasons are varied at different times. My perspective is, any business with excessive price volatility is not welcome or sustainable. The scrap and ingot prices change by the hour. This is not desirable for anybody in the business. This primarily happens due to market fragmentation, lack of transparency, lack of information, lack of digitalization, and many more factors. It is expected that when the industry becomes more formalized and organized there will be more stability, transparency, and trust in business.
Are there any plans in the pipeline by the government which could incentivize people and would enable a sustained supply of scrap?
Because of the wide range of benefits, the Indian government is keen to promote steel recycling and has been very proactive. Several policies are being formulated and policies like Steel Recycling Policy, Resource Efficiency Policy have already been released. The Vehicle Scrappage Policy is under discussion and BIS codes are being reviewed. There is also a demand from the industry to accord industry status to this sector. It would ease the formulation, implementation, and governance of such policies. I am sure as the industry evolves towards global benchmarks, there will be many more interventions by the government.
Is Tata planning to use all the scrap generated through the new plant for its consumption?
Currently, we would be selling the processed scrap to EAFs, IFs, and foundries. In the future, however, it would depend on many factors. We will see how the initiative shapes up and expands.
Could you tell us more about your partnership with Aarti Steel?
The partnership is an innovative outsourced business model to keep the project lean and asset-light. The first plant is being set-up on a BOO basis, by Aarti Greentech, a subsidiary of Aarti Steel. We have long-standing business relations with the group.