Looking beyond China

U.S. processors and dealers of some forms of copper scrap have been looking beyond China in the last year to ensure the ongoing movement of these materials. Now, Hong Kong-based Chiho Environmental Group Ltd. also appears to be looking to add scrap processing capacity outside of that country.

According to an Oct. 28 online article from Bloomberg News, Chiho Environmental is examining alternative locations outside of China to process copper scrap.

Bloomberg reports that the company is “discussing joint ventures in developing countries, including [some countries] in South and Southeast Asia, that would perform the kind of manual dismantling usually done in places such as Taizhou on China’s east coast.”

Goh Kian Guan, the company’s chief investment officer, told Bloomberg News, “We need to adapt because we have the biggest capacity for processing used electronic motors in China.”

China’s ban on Category 7 material, which includes electric motors and insulated copper wire that must be further processed to access the metallic units contained within, will be fully enacted at the end of 2018. Goh told Bloomberg News that Chiho may start some of these planned operations in early 2019.

“[It] seems like [it] may be a slow crawl to end 2018.” – a scrap processor based in the Northeast

“A lot of smelters are especially concerned about potential disruption at the end of this year and into 2019, when the high-grade material stops altogether,” he told Bloomberg News. “We always expected that environmental regulation would continue to tighten, and this is what we are seeing. But what we did not foresee back then was that it’s coming with such force, and I think all market participants have been taken aback by the blanket approach.”

China’s scrap buyers have considerably curtailed their purchases from other parts of the world in September. Also, the tariffs China’s government placed on several scrap commodities shipped from the United States will have an impact on imports. The tariffs are part of China’s ongoing trade dispute with the U.S.

China’s imports of scrap metal declined by 44 percent from August of this year to 360,000 metric tons in September, according to a report by Reuters. About 200,000 metric tons of that total were copper-bearing scrap (down nearly 39 percent from August), while only 100,000 metric tons of aluminum scrap were brought in—down nearly 47 percent from August.

Domestically, a scrap processor based in the Northeast says copper scrap generation at the industrial level seems stable. “It seems like copper is available if / when required.”

He adds that demand was strong at the end of the third quarter and heading into the fourth quarter. However, he says it was beginning to fall off as of November, adding, “December is always a wild card.” The processor says, “[It] seems like [it] may be a slow crawl to end 2018.”

He says sourcing certain grades of copper, such as insulated wire, “is a bit easier; however, higher grades, like bare copper wire, are being sought for export and domestic consumption.”

Moving material domestically has become a bit easier, the processor says, noting that truck availability has been less of a problem recently. However, he adds that the cost of moving scrap by truck “is up sharply.”