As one of the key international resource distribution routes expected to support the carbon-neutral era, Japan-India trade plays a significant role, particularly in the exchange of non-ferrous metal scrap. The relationship between the two countries regarding non-ferrous metal scrap has evolved amidst recent disruptions such as the COVID-19 pandemic, the Ukraine conflict, and the Red Sea crisis. With the goal of achieving carbon neutrality by 2050 and the midpoint of 2030 approaching, it is time to revisit the current state of non-ferrous metal scrap trade between Japan and India, based on statistical data, more than a decade after the signing of the Japan-India Comprehensive Economic Partnership Agreement (IJCEPA) in 2011.

 

The following graph shows the export performance (quantity and value) to India of major scrap (copper, aluminum, stainless steel scrap) and semi-finished products such as bullion using trade statistics from the Ministry of Finance, covering the past four years including the most recent period from January to May 2024.

 

 

Since the outbreak of COVID-19 in 2020, through the significantly impacted year of 2021, and continuing into 2022, aside from bullion , a substantial decline in performance in terms of quantity can be observed. While the Indian economy, from a GDP (Gross Domestic Product) recovery perspective, achieved a rapid V-shaped recovery in fiscal year 2021 following the negative growth of fiscal year 2020, the trends in individual industries displayed a different picture. Additionally, the Ukraine conflict that began in February 2022 led to a rise in global food prices, which exerted inflationary pressure and impacted the Indian economy.

 

It is difficult to determine whether the decline in export quantity and value was due to factors originating in Japan or in India, but it is clear that this period was a harsh winter for the non-ferrous scrap industries of both countries.

 

In particular, the decline in copper scrap is remarkable, dropping to half the level of the previous year in 2022. While exports of aluminum, stainless steel (SUS) scrap, and bullion made significant recoveries in both quantity and value in 2023, the recovery of copper scrap has been slow, creating a stark contrast.

 

Currently, the export environment is affected by the "Red Sea crisis that began in October 2023, causing a sharp rise in maritime freight rates, impacting Japan-India trade" (according to trading companies). Despite less-than-ideal conditions, the actual performance has been surprisingly strong.

 

Let's examine the performance of aluminum, SUS scrap, and bullion which have shown remarkable recovery, for the period from January to May 2024. On a quantity basis, aluminum scrap was 2,908 tons, which is 3.19 times the same period of the previous year (value basis: 552.73 million yen, 3.13 times the same period of the previous year). SUS scrap increased by 42% to 14,252 tons (value basis: 1.58964 billion yen, a 35% increase over the same period of the previous year), and bullion increased by 9.3 times to 8,211 tons (value basis: 2.3991 billion yen, 9.87 times the same period of the previous year). It is uncertain how much these will grow in the remaining seven months, but considering the recent trend of yen depreciation, there is a good chance that aluminum scrap, SUS scrap, and bullion will approach or surpass the 2023 performance levels.

 

Excluding the exceptional trends in copper and bullion, we can observe that aluminum and SUS scrap showed remarkable growth from January to May 2024. Aluminum scrap exports were 2,908 tons, 3.19 times higher than the same period last year (value: 552.73 million yen, 3.13 times higher), and SUS scrap exports were 14,252 tons, a 42% increase (value: 1.58964 billion yen, a 35% increase). Considering the recent depreciation of the yen, aluminum and SUS scrap exports are likely to approach or exceed the 2023 levels.

 

Despite recent international market disruptions, Japan-India trade in non-ferrous scrap continues to deepen.

 

The trends in product-based exports, exemplified by recycled aluminum ingots, also deserve attention. The graph below shows that from January to May 2024, exports were 21,530 tons, a 44.6% decrease from the same period last year (value: 7.23057 billion yen, a 40% decrease).

 

Although exports seemed to be growing steadily, there was a sudden halt in 2024.

 

Considering Japan's domestic situation, where the demand for recycled aluminum ingots cannot be met solely by domestic production, there is a desire among market participants for another key player, comparable to Chinese production. Indian production is one of the strong candidates. Observing whether the current situation, where actual performance has significantly fallen short of the previous year, is a temporary phenomenon or not, is a temporary phenomenon will be a key focus in the latter half of 2024.

 

 

Japan and India signed the IJCEPA in February 2011 (effective August 1, 2011), providing a foundation for strengthened cooperation between Japanese and Indian non-ferrous industry stakeholders, including in terms of tariffs.

 

On June 28, the 6th Japan-India Industrial Competitiveness Partnership Vice-Ministerial Meeting* was held in Delhi, agreeing to further promote industrial cooperation, including the promotion of Japanese investment in India and human resource development. How the private sector leverages such government support to deepen Japan-India relations will be crucial, especially in the non-ferrous scrap sector, which is an essential option for achieving carbon neutrality by 2050.

 

*Japan-India Industrial Competitiveness Partnership:

This is a vice-ministerial framework agreed upon in December 2019. Working groups are established for each industrial sector to advance various discussions and initiatives aimed at strengthening India's industrial competitiveness.

 

According to the World Bank's forecast, India's economic growth rate for 2024/2025 (April 2024 - March 2025) is expected to slow to 6.6%, but India's position as a leader in the South Asian economy remains firm. The stage is more than set for deepening the relationship between Japan and India in the non-ferrous metal scrap industry.

 

Finally, we would also like to outline India's imports of copper, aluminum, and SUS scrap from various countries 2023 and January-April 2024 performance). Japan appears, albeit at a low level, in aluminum and SUS scrap (January-April results).

 

First, copper scrap. According to India's trade customs statistics, copper scrap imports in 2023 were up 13.1% y/y to 316,662 tons. Import value was down 1.1% to $1,664.53 million.

 

For the January-April period of 2024, imports declined 1% y/y to 77,949 tons. Import value declined 1.0% y/y to $459.96 million.

 

Next, aluminum scrap: In 2023, aluminum scrap imports increased 4.3% y/y to 1,829,817 tons. Import value declined 6.4% y/y to $3,628.77 million.

 

 For January-April 2024, imports fell 13.1% y/y to 477,207 tons. Import value declined 14.4% y/y to $933.03 million.

 

Finally, SUS scrap: imports in 2023 totaled 1,384,866 tons, up 4.5% y/y. Import value was down 18.2% to $2,097,785.

 

In January-April 2024, imports fell 17.3% y/y to 349,696 tons. Imports fell 32.0% y/y to $461.45 million.

 

(IRuniverse G・Mochizuki）

Related articles