Despite the decline in imports, India's overall ferrous scrap consumption actually rose 17 percent to a record 41 million mt in financial year 2025-2026 from 35 million mt in financial year 2024-2025. This is because domestic scrap generation jumped 22 percent year on year to 32 million mt, reducing the country's dependence on imported material.
Grade-wise and region-wise import scenario
Among all import grades, heavy melting scrap (HMS) recorded the sharpest decline in absolute volumes. Meanwhile, MS shredded saw the steepest percentage decline at 35 percent, as the price premium for shredded grades became increasingly difficult to justify amid margin pressure.
Western India remained the largest importing region despite an 18 percent year on year decline to 2.8 million mt, while northern India saw the sharpest drop of 27 percent to 1.77 million mt. Imports into southern India fell by 15 percent to 1.63 million mt, whereas eastern India recorded only a marginal decline of six percent to 630,000 mt, indicating relatively steady buying activity compared to other regions.
Why did imports fall?
The sharp decline in India's ferrous scrap imports during financial year 2026 was mainly due to the better availability and competitive pricing of domestic scrap and alternative metallics. At the same time, uncertain global market conditions and volatile import prices kept buyers cautious, resulting in weaker interest toward imported scrap across most regions in India.
At the same time, domestic scrap availability improved due to rising vehicle scrapping, infrastructure demolition activity, and higher industrial scrap generation. This reduced dependence on imported cargoes, particularly in north and west India, which are traditionally key import-consuming regions.
Notably, India's scrap-based crude steel production rose sharply by 16 percent year on year to 38 million mt in the given financial year, outpacing overall crude steel production growth of 11 percent.
Imported HMS 80:20 (Europe-origin, Jalna landed) was largely assessed in the range of INR 33,000-37,000/mt during the fiscal, while domestic scrap remained cheaper by around INR 2,000-4,000/mt. This price gap made imported cargoes commercially less viable for electric arc furnace (EAF) and induction (IF) mills, prompting buyers to increasingly shift towards domestic scrap and alternative metallics such as sponge iron and pig iron, especially given weak margins during the prolonged monsoon when steel prices fell to a five-year low.
Although imported scrap prices softened briefly during parts of mid-2025, rising freight costs, Red Sea rerouting, and geopolitical tensions in the Middle East pushed landed prices higher again in early 2026.
The Indian rupee also depreciated sharply and hovered above the INR 90/mt mark, particularly during the last quarter of financial year 2026, further increasing import costs and keeping many buyers on the sidelines to avoid procurement losses amid uncertain global market conditions.
Country-wise trends
The US remained India's largest scrap supplier in financial year 2026 despite a 28 percent decline. Among the top 10 suppliers, Brazil was the only supplier to record a 30 percent increase, as competitive freights and improved HMS availability made it an attractive source.
Outlook
The structural rise in domestic scrap availability is expected to keep India's dependence on imported ferrous scrap relatively subdued compared with historical levels. However, the slower-than-expected rollout of end-of-life vehicle (ELV) recycling may delay the creation of a large domestic ferrous scrap pool that was expected to support secondary steelmakers and reduce import dependence. At scale, the policy could generate 1-2 million mt of additional steel scrap annually, particularly benefiting scrap-intensive hubs such as Mandi Gobindgarh and Alang.
However, unless policy flexibility is introduced and ELV collection infrastructure improves significantly, India's vehicle scrappage ecosystem may remain constrained in financial year 2027. Despite 9.52 million vehicles becoming age-eligible in financial year 2026, automakers achieved only around 30 percent of mandated scrappage targets, reflecting weak ELV inflows, limited testing infrastructure, and operational bottlenecks across the recycling chain.
The Geopolitical risk wildcard: Further Middle East escalation is the single biggest upside risk - adding $15-30/mt freight premium instantly.
Overall, India's imported ferrous scrap market is expected to remain cautious. Higher availability of cheaper domestic metallics, including local scrap and sponge iron, continues to reduce import viability for EAF and IF mills. At the same time, freight volatility, geopolitical tensions in the Middle East, and elevated global scrap prices are keeping landed import costs relatively firm. However, any sharp improvement in domestic steel demand or tightening in local scrap availability could revive selective import buying during financial year 2027.
Source: BigMint