The cases of COVID-19 in India more than doubled on March 24 from March 20. In a bid to contain the spread of the virus, the Indian government has announced a complete lockdown in most parts of the country. With logistics and businesses affected, Davis Index spoke to Sanjay Mehta, the president of Material Recycling Association of India (MRAI) to understand the impact on the recycling industry.

 

“It is too early to predict the extent of financial, entrepreneurial, employment, economical loss due to the outbreak”, said Mehta. MRAI has over 1200 members across India. He further added that no one can predict when the operations are likely to resume.

 

India’s tally of COVID-19 cases reached 492 on March 24. The central government has asked state governments to impose curfew in a few areas to control the spread of the virus. Barring essential industries, others in 30 states have been asked to shut down till March 31 at the minimum. There is no clarity on when businesses could start functioning normally.  

 

In India, around 7,000-10,000 industrial units are involved in metal recycling and provide direct or indirect employment to 2mn people. At present, all the metal recycling units are shut. Around 100 ferrous recycling units involved in manufacturing sponge iron and TMT bars, with continuous production cycles, will be allowed to run at 25 to 50pc of their production capacity according to the government’s instructions.

 

With the closure of melting facilities, the supply of scrap is likely to outpace demand. At present, scrap prices are on a continuous downtrend. Mehta added, no one is ready to import scrap from the US or UK as importers are concerned about remaining free of COVID-19 infection. He also states that once markets reopen, prices of scrap will show an uptick for the first few days and then surge. India imported 6.7mn mt of ferrous scrap in the fiscal year 2018-19 and 4.6mn mt in the fiscal year 2019-20.

 

Mehta states that the recycling industry will be hit because of COVID-19 since market participants believe the government may not provide much assistance. But the industry expects some waiver in interest rate could be announced after perusing the situation. 

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