SteelMint Scrap Summit: Infrastructure-fueled boom

Foreign direct investment (FDI) and infrastructure spending are combining to push the steelmaking sector in the Indian subcontinent into boom times, according to presenters at the 4^th Steel Scrap, Billet & DRI Trade Summit.

At the event, hosted by SteelMint in Bangkok in late August, presenters from India, Pakistan and Bangladesh said FDI from around the world was boosting the need for steel in those nations, with steel producers responding by adding capacity. Much of that new capacity, they noted, is coming in the form of scrap-fed electric arc furnace (EAF) or induction furnace production.

Sanjay Ghosh of Bangladesh-based steelmaker BSRM said the “40 active mills” producing steel in his nation imported 19 percent more ferrous scrap in the first half of 2019 compared to 2018.

Thanks to its status “among the five fastest growing economies in the world,” said Ghosh, Bangladesh is likely to see its steel consumption rise from 45 kilograms (99 pounds) per person in 2018 to 73 kilograms (161 pounds) per person in 2022.

Gross domestic product (GDP) growth of some 8 percent annually has led to steel output growing 37.5 percent per year recently, added Ghosh. Some of the 8 million metric tons produced is heading toward “a lot of infrastructure work,” according to the steel executive.

The United States is the largest ferrous scrap supplier to Bangladesh currently, said Ghosh, followed by the United Kingdom, South Africa, Australia and Singapore. Shipbreaking provides another source of ferrous scrap and used steel, he added, with the number of vessels scrapped in Bangladesh rising 36 percent in the most recent fiscal year (from 196 ships to 255 vessels). Singapore, Japan and South Korea are the largest providers of obsolete ships to the nation.

Economic cooperation with China has provided much of the boost in Pakistan, according to a video presentation provided by Fahad Javaid Mughal of Pakistan-based Mughal Iron & Steel Industries Ltd. The nation currently has some 350 mills with 6 million tons of capacity, with many of these mills of the smaller, scrap-fed induction furnace variety.

Scrap imported to Pakistan “has positive prospects,” according to Mughal, who described Pakistan’s own ferrous scrap supplies as “limited.” He estimated that 80 percent of the ferrous scrap consumed in Pakistan is imported, with import volumes having risen 24 percent in 2017 and 38 percent in 2018.

Ongoing infrastructure projects stemming from cooperation with China’s government, combined with a new housing policy in Pakistan, help provide “the backbone of the country’s economy, and have increased steel demand” in Pakistan, stated Mughal. His message to overseas scrap suppliers was “to keep Pakistan on your radar.”

In India, a national Ministry of Steel Policy has set ambitious targets for both steel production and ferrous scrap recycling activity. Vijay Arora of Mumbai-based Mahindra Group Accelo gave an overview of that company’s efforts to collect and recycle end-of-life vehicles (ELVs) to help make progress toward both goals.

Arora said the effort has proved challenging, in part because older vehicles tend to meet their end not in large cities, but scattered widely in the Indian countryside. Mahindra and other companies are being encouraged to build ELV collection centers and shredders in large cities, but even obsolete vehicles there can be difficult to collect, said Arora, because an unregulated, informal sector can pay more for them.

Efforts to recycle more ELVs tie into a need for more scrap, with India having consumed some 16.8 million metric tons of ferrous scrap in 2017. That figure is expected to rise to 22.3 million metric tons in 2023 and (if Ministry of Steel goals are met) some 40 million metric tons by 2030.

According to Arora, some 4.38 million metric tons of ferrous scrap was imported into India in 2017, with that figure potentially rising to 7.23 million metric tons by 2023. India’s Ministry of Steel, however, has stated it would like India to be self-sufficient for ferrous scrap by 2030, despite the fast-rising need.

An analysis by Kedar Joshi of SteelMint shows 54 percent of India’s 112 million metric tons of current annual output is produced by basic oxygen furnaces, but scrap-fed electric arc furnaces (24 percent) and induction furnaces (22 percent) produce nearly half.

The United Arab Emirates, the leading ferrous scrap supplier to India, sends only containerized ferrous scrap shipments. However, the United States, India’s second-largest supplier, sends 48 percent of the bulk ferrous scrap shipments booked into India. Also supplying scrap to the nation are the United Kingdom, Australia and the Netherlands.

The SteelMint 4^th Steel Scrap, Billet & DRI Trade Summit was August 27-29, 2019, at the Hotel Avani Riverside in Bangkok.