Business

Trade war makes India a haven for aluminium scrap dumping

India has overtaken China as the preferred destination for aluminium scrap with imports growing 18.8% in the January-March 2019 quarter compared with the same quarter of the previous year.

This, according to industry players, is hurting Indian industry and is the direct result of the trade war between China and the U.S.

India imported 3,34,725 tonnes of aluminium scrap in the January-March 2019 quarter compared with China’s 3,30,567 tonnes in the same period, according to a report by S&P Global Platts. While India’s imports grew 18.8% over this period, China’s declined by 32.1%.

“The U.S. had imposed an import duty of 10% on aluminium in March 2018 and in response, China had implemented a 25% duty on the import of aluminium scrap from the U.S.,” said Rahul Sharma, vice-president, Aluminium Association of India.

“This means that the scrap is being diverted and dumped in India. Imports of scrap from the U.S. have gone up by about 148% from 2017-18 to 2.6 lakh tonnes in 2018-19.” Commerce Ministry data shows that this rising trend of aluminium scrap imports coincides strongly with the tariff war between the U.S. and China. While the value of scrap imports fell from $1,549 million in 2014-15 to $1,400 million in 2016-17, it shot up to $2,041 million in 2017-18 and further up to $2,467 million in 2018-19. Mr. Sharma warns that this situation could become worse in the near future because of upcoming changes in China’s policies towards aluminium scrap.

“China has not only put the duty on U.S. scrap, but they are also classifying aluminium scrap as a restricted import, which will be implemented from July 1, 2019,” he added. “They also have a plan to ban all scrap by 2020. This will only increase the dumping in India.”

Industry players say that the other reason for the dumping of aluminium scrap in India is the duty structure in place, something they want the government to revisit in the upcoming Budget.

While other metals like zinc, copper, lead, and nickel all have the same import duties for their primary and scrap variants, this is not so for aluminium. Aluminium scrap imports are taxed at just 2.5%, while primary aluminium is taxed at 7.5%.

“What is also happening is that scrap is eating into the primary market,” Mr. Sharma explained. “That is, impure scrap is being used in place of pure primary scrap in consumer-facing sectors such as consumer durables, utensils and also in sectors of national importance such as power transmission.”

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Printable version | Nov 26, 2020 4:42:35 PM | https://www.thehindu.com/business/trade-war-makes-india-a-haven-for-aluminium-scrap-dumping/article28214476.ece

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