The year 2020 has been a challenging one for the Indian economy. The recycling industry, which employs 1.75 million people and contributes 2% to the Indian GDP, had a great beginning for the year 2020. As regards iron and steel manufacturing, the Indian government’s National Steel Policy of 300 million tonnes (MnT) of installed crude steel capacity by the year 2030 was the way forward for both primary and secondary steel manufacturers. However, during March 2020, Covid-19 was identified and the lockdown was announced by the government, which had a huge impact on both the supply and demand sides. Steel production and consumption were affected badly. India’s production went down during Covid-19 by 65%. Crude steel production for January-August, 2019 was 75.2 MnT against a production of 61.1 MnT for the same period in 2020.


The lockdown easing helped the markets to get better in terms of demand. However, the Red, Orange and Green zones along which containment areas were demarcated had an impact on supply chain logistics and most of the imported scrap containers were stuck at various ports across India, incurring huge detention charges and demurrages.  When the lockdown was completely lifted, the imported containers were transported for consumption after the government intervened and requested shipping lines not to charge in terms of detention and demurrages.

By August, the situation had improved tremendously and most of the markets in India had rebounded to the pre-pandemic levels. The capacity utilisation of Indian manufacturing reached a level of 77% by September.  Demand for automobile, capital goods and white goods have picked up.

The only supporting factor during the lockdown was the export markets.  China was importing billets to the tune of 1.9 MnT for the period April to September, 2020. During this period of the pandemic, India exported total steels of 6.5 MnT.

Going forward, the Indian steel market is expected to remain strong given the following reasons. Stimulus measures offered by the Indian government; the ‘Make-in-India’ policy advocating use of domestic steel; housing projects by the government; infrastructure investments and investments from abroad; and export opportunities etc.

The government protects its local steel manufacturers with a policy which mandates local steel be used in preference to imports for government-funded projects. India also has a safeguard duty of 12.5%-15% on steel imports. India’s per capita steel consumption is at 75 kg as against the world average of 225 kg which goes to show the humongous opportunity the Indian market offers.

Raw Materials

As production increases, the raw material needs would also increase.  India’s crude steel production for the year 2019 is about 111 MnT. Out of this, approximately 45% is manufactured using the basic oxygen furnace (BOF) route and 55% through the electric arc furnace (EAF) and induction furnace (IF) modes.

India mines about 250 MnT of iron ore of which around 180 MnT is consumed locally and the rest is exported.

As regards the EAF and IF segments, scrap generation domestically, as per the Ministry of Steel, was 25 MnT in 2018-2019. However, there is no authentic data available on scrap collection within India. About 7 MnT of scrap was imported in 2019.

Majority of the scrap came from the US, UAE, UK, Singapore, South Africa and Australia. India will continue to be import-dependent. Container imports of ferrous scrap will dominate the Indian scrap market in the coming years. Scrap as a raw material to EAFs and IFs will help India to improve on the pollution front. With strong domestic demand, a stable Indian rupee and adequate liquidity, imports are likely to continue into India.


India’s scrappage policy will encourage more shredders to process the end-of-life vehicles with extended collection networks across India. This may, in the long run, help India to be less import-dependent.

Scrap prices, in the short term, are expected to remain strong because of steel demand across the globe, tight supply of scrap to yards and the container shortage. Freight rates are likely to go up which will also impact scrap prices in the coming months. It is very important to understand that the current steel demand is fed by the ongoing fiscal stimulus in China and, for now, China is driving the demand primarily. How long this rally will continue is anyone’s guess and by second half of 2021 this stimulus might fade, which may impact global steel demand.

The author is Group Director (Commercial), Indicaa Group, Dubai.

Disclaimer: Please note that any information offered in this article is expressly the opinion of the author of this article and does not (necessarily) reflect the views of Steel360 magazine. No part of this publication may be copied, reproduced or stored in a retrieval system or transmitted in any form or by any means, mechanical, electronic, photocopying, or otherwise without the prior written permission of the author and publisher.