In lieu of scrap, China imports semifinished aluminum

The volume of unwrought aluminum imported into China surged in June as that nation’s economy and automotive industry rebounded from its bout with COVID-19. A variety of factors have contributed to China’s appetite for the metal, with one of them being its unwillingness to feed furnaces with imported aluminum scrap.

Citing data from the General Administration of Customs of the People's Republic of China (GACC, formerly GAC), Shanghai Metals Market (SMM) says imports of unwrought aluminum alloy “totaled 466,500 metric tons in the first half of 2020, soaring 706 percent from the same period last year.” The nation’s June 2020 figure of 131,000 metric tons was 754.5 percent higher compared with a year earlier.

China’s government has only been allowing aluminum scrap to enter that nation on a quota basis in 2020. It has issued those quotas (which also apply to other scrap metals, plus paper and plastic) in 11 batches thus far, with most of them consisting of relatively meager amounts of aluminum scrap.

The ninth batch of quotas, issued in early July, included allotments for 200,000 metric tons of aluminum scrap, causing expectations that the second half of the year could consist of larger volumes. But the two batches to follow approved only 3,700 metric tons of aluminum scrap.

The lack of scrap—along with the global COVID-19-related economic slowdown—also has caused Chinese producers to export less finished and semi-finished aluminum in 2020, according to SMM. The media outlet says “orders decreased [at Chinese production sites] in June amid concerns about the [availability] of secondary cast aluminum alloy raw materials.”

The difference has been noticeable for scrap traders in North America. From 2007 to 2017, China imported between 1.9 million and 2.8 million metric tons of aluminum scrap annually, with scrap from the United States making up a double-digit percentage of that total each year. Each of those years, China more than doubled the amount of aluminum scrap it imported compared with the second-ranked nation, and in 2010 it quintupled the second-place finisher (South Korea).

In the first six months of 2020, the U.S. sent 117,000 metric tons of aluminum scrap to China, according to U.S. Census Bureau data. That placed China fourth, behind Malaysia (165,000), South Korea (142,000) and India (123,000).