Alloy Steel Makers: Metallurgy's Green Shift: Duty-Free Plea

DRI Pellets
DRI PelletsImage Source: SteelGuru

Synopsis

Alloy steel manufacturers in India are requesting the Steel Ministry to remove the import duty on gas-based direct reduced iron pellets, aligning with the push towards green steelmaking. This move aims to address the shortage of low-emission steel-making materials and support decarbonization.

Article:

Indian alloy steel producers are reaching out to the Steel Ministry with a significant request, to eliminate the import duty on direct reduced iron (DRI) pellets created using gas-based or hydrogen-based methods. This appeal is part of the industry's broader move towards sustainable steel production, often referred to as green steelmaking.

At present, the import of DRI pellets or hot briquette iron, both vital for steel production and known for their lower carbon emissions compared to traditional raw materials, is subject to a 5% duty. The aim behind this duty waiver is to support the Ministry’s efforts in reducing the steel industry's carbon footprint.

Typically, Indian steelmakers, especially those producing long steel and stainless steel, rely on scrap or coal-based DRI pellets. The gas-based variants, due to their scarcity in India, are often imported.

The Alloy Steel Producers Association of India (ASPAI) has expressed this concern in a letter to the ministry, urging that the import duty waiver be included in the upcoming Budget as a step towards decarbonization. They argue that, although a Scrappage Policy has been introduced, a Ministry study indicates a substantial scrap shortage in the near future, hence the need for duty-free DRI/HBI imports.

Currently, steel scrap, another low-carbon emission option for steelmaking, is imported duty-free. However, with over 60 countries, including the European Union, imposing policies that could restrict scrap exports, Indian steelmakers are anticipating a scrap shortage.

India's annual scrap usage is about 25 million metric tons, mostly imported from the UAE, the EU, the UK, and the USA. With many of these regions considering export barriers or taxes, it could make scrap exports more expensive or halt them entirely.

The Indian industry body points out that allowing duty-free imports of DRI or HBI pellets would support the creation of clean metallic materials necessary for low-carbon steel production. This strategy aligns with global trends where countries responsible for 77% of crude steel output are applying scrap export barriers.

Conclusion

Indian alloy steel producers are advocating for a greener future by requesting a removal of the import duty on more environmentally friendly steel-making materials. Their proposal aims not only to mitigate impending raw material shortages but also to further the industry's commitment to reducing carbon emissions. If accepted, this duty waiver could be a significant step towards a more sustainable and responsible steel manufacturing sector in India.

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