MRAI 2020: Aluminum scrap seeking respect in India

Primary aluminum producers in India started 2019 by lobbying India’s government for a steep hike in import duties levied against aluminum scrap, widely seen as a plea to protect their market share. Speakers at the 2020 Materials Recycling Association of India (MRAI) meeting near Delhi in February say the request typifies a situation in which metals recyclers in the nation are either misunderstood or not prominently considered.

Dhawal Shah, an MRAI vice president and managing director of Mumbai-based Metco Marketing, said imported aluminum scrap creates employment, leads to aluminum production with fewer greenhouse gas emissions and allows manufacturers to produce “valuable material,” some of which is exported.

That being the case, asked Shah, “why is its value being questioned” by the Indian government “again and again?” He said any accusation that secondary aluminum is of substandard quality compared to primary product “is just a myth that needs to be busted.”

Shah said recyclers and the MRAI have spent the last several years “jostling with a lot of issues” stemming from the government, including duties and increased inspections. “Let’s make policies that make this industry thrive and grow—it’s time we get rewarded, and not penalized,” he said of metals recyclers.

Shah said MRAI is “with the government in trying to improve domestic supply chains,” but that does not mean scrap imports can be quickly substituted. “Every country in the world that has a vibrant manufacturing sector is chasing scrap. We welcome domestic material, and we welcome imports also,” stated Shah.

Presenter B. N. Sathpathy of New Delhi-based government think tank NITI Aayog, who has helped research recycling issues for the Indian government, told MRAI delegates, “There is no escape from the fact that you have to [create] a circular economy. We cannot keep on extracting aluminum ore.” He added that from 2020 to 2025, scrap imports will be “extremely important” to spur economic growth.

However, Sathpathy also remarked that when it comes to import duties, quality inspections or specifications, the government will continue to play a role. He also urged MRAI to stay in touch with the government to share information on recycling best practices and technology improvements.

Brian Shine of United States-based recycling firm Manitoba Corp., who also serves as an officer of the Institute of Scrap Recycling Industries (ISRI), Washington, described the nonferrous scrap trade between the U.S. and India as “growing exponentially.”

Shine said in 2018, the nonferrous scrap trade from the U.S. to India exceeded $1 billion for the first time in history, and “actually ended up totaling more than $1.5 billion.” In 2019, it grew even higher to be worth more than $1.6 billion. Volumes of stainless steel shipped from the U.S. to India jumped by 66 percent, last year, while the aluminum scrap trade grew by 24 percent and copper by 29 percent.

Shine urged the MRAI and India’s government to incorporate ISRI specifications into whatever separate standards they formulate, and he thanked both the MRAI and Indian government for showing an appreciation for the difference between secondary raw materials and waste.

Commodities analyst Kunal Shah of Mumbai-based Nirmal Bang Co. offered his predictions for where nonferrous metal prices could be heading in 2020. He said he bases his predictions on his views that the commodity “supercycle” has reached its end, and also that central banks are nearing the end of their ability to stimulate economic growth.

Shah said he has been researching commodities for 15 years, but the two factors cited above—combined with the coronavirus in China—mean “we are in a very different world right now.”

Aluminum and copper, said Shah, will need to experience “supply shocks” for their prices to rise appreciably in 2020, with demand growth for both metals having tapered off. He said aluminum prices could drift below $1,700 per metric ton (77 cents per pound), where they were by late February, and the “maximum bounce would be $2,000” per metric ton (91 cents per pound).

Likewise, he said he has “a very subdued outlook” for copper in 2020, with a “bounce” in that market raising it to a maximum of from $6,200 to $6,300 per metric ton ($2.81 to $2.86 per pound) for the year.

He described nickel as “the one metal I am bullish on” thanks to global battery demand. Said Shah, “I think nickel going to $14,500 to $15,000” per metric ton ($6.58 to $6.80 per pound) is feasible in 2020.

The MRAI’s 7^th Annual International Indian Material Recycling Conference was Feb. 7-9 at the Hotel Hyatt Regency Gurgaon near Delhi.