Recyclers seek detention, demurrage fee waiver on imported scrap

Suresh P Iyengar Mumbai | Updated on March 28, 2020

The Material Recycling Association of India has urged the Centre to waive off the detention and demurrage charges for 30 days in order to rescue recyclers who are caught unawares in country-wide lockdown.

The recycling industry, which imports metal and paper scrap from overseas, has built a stockpile of about one million tonne of metal scrap alone at various ports.

The value of scrap in the container would become zero if the shipping companies charge them detention demurrage for 30 days. The yalue of iron scrap is about $5,000 for a container. For a container of 20 feet, the detention charges are about $52 per day and works out to be about $1,750 for 30 days, including various other charges.

If other expenses, like ground rent, CFS (container freight station) charges, transportation are added the value of the goods in the container will become zero, said Sanjay Mehta, President, Material Recycling Association of India.

Companies are not in a position to make payments and take deliveries of the goods due to the complete lockdown announced by the government.

Meanwhile, metal prices have declined by 25-30 per cent since outbreak of coronavirus in China. India’s secondary metal producers had bought the metal scrap overseas three months back based on prevailing price at that time. Unfortunately, the sharp fall in metal prices has now made imported raw materials costlier that finished metal prices.

Another worry

On the other hand, port congestion has become a major worry for secondary metal and paper recyclers. Since, shipping companies have declared themselves operational, they are asking scrap importers to clear their consignments or pay penalty for engaging the containers beyond the agreed transportation period.

The absence of supporting supply chain infrastructure such as truck drivers, containers during the lockdown period is another worry for recyclers.

MRAI has made various representations to the Ministry of Shipping and domestic and overseas shipping companies Maersk, Swiss-Italian international shipping line MSC, CMA CGM (Compagnie Maritime d'Affrètement and Compagnie Générale Maritime, which means Maritime Freighting Company and General Maritime Company) for waiver of charges without any success.

‘Massive burden’

In a letter addressed to Nirmala Sitharaman, Union Finance Minister, Mehta said the economy is going to face hardships for the next few months, and incurring such heavy detention charges will be a massive burden on small and medium sized recycling companies.

Shipping companies see a business opportunity even in the ongoing world pandemic and charge a levy of $104 per container per day for 40-feet container. The charges will not only erode working capital but make many small businesses go bankrupt, he said.

Published on March 28, 2020

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