A weak rupee has decreased India’s scrap metal imports this month forcing buyers to find cheaper alternatives.
Last year the rupee lost about a quarter of its value against the dollar, although while weaker currency should boost exports which should rebalance the exchange rate, global economic weakness means India is finding it harder to export more.
Metal Recycling Association of India (MRAI) vice president Zain Nathani said: “Things have been more difficult for importers this month. The exchange rate just makes it much more challenging to buy scrap. The extreme volatility has caused a lot of chaos.”
Instead of using imported scrap, Indian steel makers are replacing it with domestic scrap or raw materials like direct-reduced iron.
In the last few weeks demand has been very week as the rupee went down once again.
Prices fell to about $460 (£301) per tonne in CFR Nava Sheva, and hardly any sales were made.
Nathani added: “But the market can turn around at any time, maybe the first few weeks of June could be a bit soft but I don’t see these numbers lasting.
“If the exchange rate moves a bit in India’s favour you’ll see the Indians right back at these numbers.”
In the meantime, the Indian Government has announced new regulations to try and combat fraud in the scrap metal sector. It has released new criteria for enlisting agencies who give pre-shipping inspection certificates.
Nathani concluded that: “The old lists will be cancelled as a lot of fraudulent certificates had been issued, which caused a lot of problems in terms of empty containers arriving in India.”