Key takeaways:
After a 2024 slump, India’s import volumes for ferrous scrap started this year on a stronger note, but the positive trend faces being undermined by the re-emergence of cheaper alternative irons, market sources have told Fastmarkets.
This is one of the major pain points being felt by recyclers and traders selling scrap into India in the run up to the Material Recycling Association of India’s (MRAI) International Business Summit, to be held in Saigon, Vietnam, on August 6-7 2025.
India’s import volumes of ferrous scrap amounted to 3.48 million tonnes in January-April 2025, up by 7.9% year on year, according to Indian customs data cited by the Global Trade Tracker.
Over the last two months, demand for steel scrap has been sharply undercut by falling prices for domestic direct-reduced iron (DRI) – often referred to in the local market as sponge iron.
And it is this plentiful local material which is now having the most influence on sourcing strategies for induction furnace (IF) mills across the country, according to sources.
It is a pattern which repeats the market conditions of 2024, when cheaper sponge iron pushed Indian scrap demand and import volumes down sharply.
Indian steelmakers opting to increase their use of domestically produced DRI are finding this sourcing strategy allows them to maintain production levels while keeping input costs under control.
As a result, even though global and Indian steel scrap prices have declined, producing finished steel with a higher proportion of DRI remains economically viable, according to sources.
For now, this substitution effect is expected to keep pressure on scrap imports, underlining the increasingly competitive environment in India’s steelmaking raw materials market, sources said.
“Monsoon rains have started across the country, and finished steel demand and prices are expected to stay subdued,” a steel mill source said in late June.
“This decline in demand will increase cost pressures on mills. Most will now rely heavily on DRI, local scrap, and pig iron, as current imported scrap prices remain unviable for those with access to lower-priced raw materials,” the mill source added.
Speaking further about imported scrap, the mill source said, “India is also currently receiving a significant volume of on-arrival cargoes. Additionally, stockpiles available at ports are being offered to Indian mills at comparatively lower prices. This supply will continue to meet domestic steel scrap demand during the monsoon season.”
The situation for scrap demand has worsened again over the last month, with soft Indian sponge iron prices pushing down scrap purchases, particularly from mid-June until the first week of July.
Local DRI prices, delivered to Gandhi Dham, Gujarat, were heard at 24,500-25,000 Indian rupees ($285-291) per tonne in the week to July 11, compared with 25,000-26,000 Indian rupees per tonne in the week to July 4.
Fastmarkets’ average price for its steel scrap shredded index, import, cfr Nhava Sheva, India in June 2025 was $359.77 per tonne, while the average for its price for DRI domestic, exw India was 24,650 rupees ($288) per tonne.
This put the scrap premium over DRI at $72.10 per tonne in June, higher than the 2025 year-to-date average premium of $63.05 per tonne but below the 2024 average premium of $79.74 per tonne.
The premium has also trended higher over the last decade. While it averaged a difference of $37.54 per tonne in 2015-2019, it has averaged $69.33 per tonne in 2020-2025 to date.
Furthermore, following the ceasefire between Iran and Israel after a 12-day conflict in late June, offers for imported Middle Eastern hot-briquetted iron (HBI), DRI, and iron ore pellets resumed in India. This was expected to also hurt local DRI prices, according to sources.
“This renewed supply is expected to put pressure on local DRI prices, particularly in western India, and could affect future deep-sea and containerized scrap bookings,” a trader said in late June.
Iron ore pellets (65% Fe) in bulk were put on offer at $112-118 per tonne CFR Kandla, and HBI at $275 per tonne CFR Kandla during the week to July 11, according to market sources.
The metallics undercut, which was also persisting for much of 2024, is a major reason why Indian import scrap demand is struggling to benefit from strong increases to crude steel output in the country.
India is the most consistent growth nation of any major global steelmaker and will see further major capacity additions over the next five years.
Indian steel production rose by 6.3%% year on year to 149.6 million tonnes in 2024, according to the World Steel Association (Worldsteel). On the other hand, ferrous scrap imports dropped by 20.2% to 9.39 million tonnes last year, according to Indian customs data.
In January-May 2025, Indian steel output hit 67.2 million tonnes, up by 8.2% year on year, Worldsteel stats show.
But a quick look at India’s DRI production demonstrates why scrap import demand has not fully benefitted from the rise to Indian crude steel output.
In short, DRI output is outstripping steel production.
India produced 24.4 million tonnes of DRI in January-May 2025, up by 8.8% year on year, Worldsteel stats show.
Some market sources believe, therefore, that while DRI output continues to rise in India, at the same time as a rising local scrap collection volume, there will be no way for ferrous scrap imports to benefit from India’s growth.
Other market participants, however, disagree and believe there will be a growing role to play for imported scrap ahead.
“Demand will be good for Indian imports within the next 2-3 years,” a major scrap exporter source said on July 10. “If [electric-arc furnace (EAF)] steelmakers have to use scrap in their furnaces, they can’t only depend along on local scrap and sponge iron”.
One reason for this is quality, given that local supply of low-impurity shredded and busheling is limited in the country, so imports may be required for steel mills producing higher grades of steel.
Major EAF plants from the likes of Tata Steel and Jindal Steel and Power Ltd will be built over the next five years, which may require large import volumes, Zain Nathani, vice president of the Material Recycling Association of India (MRAI), said during a Fastmarkets webinar in May 2024.
But the concern among Indian importers is growing amid tighter restrictions to scrap exports from major generating regions like the European Union.
India was one of the 24 nations outside of the Organization for Economic Co-operation and Development (OECD) to have submitted applications to continue receiving non-hazardous EU scrap classified as “waste” in compliance with the revamped Waste Shipments Regulation (WSR), the European Commission said in February.
A decision will be made in November 2026 as to whether they were successful in obtaining any sort of exemption.
Meanwhile, pressure from European steelmakers has led to the Commission to ponder the imposition of blanket export tariffs or restrictions on EU-origin ferrous scrap, with a decision expected in the second half of the year, according to market participants.
Fastmarkets will be keeping a close eye on how sponge iron prices affect India’s growing scrap market through our reports and pricing. **
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.