Less aluminum scrap, more ingot enters China in August

Following a pattern that also existed in July, metals producers and products manufacturers in China imported significantly more finished and semi-finished nonferrous metals in August 2020 compared with the same month from the previous year.

Government statistics cited by Shanghai Metals Market (SMM) show imports of unwrought aluminum alloys in China in August 2020 of 146,000 metric tons, representing an 810 percent spike compared with August 2019.

Meanwhile, imports of aluminum scrap into China totaled 72,000 metric tons in August, decreasing 22.2 percent compared with the previous month and down 48.9 percent from a year earlier, according to customs data cited by SMM.

The red metals sector in China also imported more copper cathode in the summer of 2020 compared with the year before, according to SMM. In August 2020, importers brought in 62.8 percent more cathode compared to August 2019, exhibiting a less intense spike compared to aluminum.

Year-to-date, the cathode imports have added up to 2.95 million metric tons in the first eight months of 2020, amounting to a 37.7 increase from the same period last year, according to SMM.

Both aluminum and copper scrap imports have been subject to quota restrictions in China in 2020. The 12 batches or sets of quotas issued thus far have fluctuated in volume, seemingly dependent on the health of the overall economy or metals sector.

The government of China has set a goal of prohibiting imported scrap materials from entering the nation at all starting in 2021, although it has received pushback from overseas trade associations such as the Washington-based Institute of Scrap Recycling Industries (ISRI) and, almost certainly, from its own manufacturing sector.

Within China, trade groups led by the China Nonferrous Metals Industry Association’s Recycling Metals Branch (CMRA) have been setting up a system to allow high grades of nonferrous scrap that can meet a set purity level to be imported in 2021 and beyond. These materials are being classified as a “resource” rather than a “waste.” No “scrap” classification appears to exist in the nation’s customs or environmental lexicon.

Just a few years ago, the People’s Republic of China imported record-setting amounts of aluminum, copper, paper and plastic scrap. Trade figures posted to the ISRI website show that in 2017 China imported more than 2.1 million metric tons of aluminum scrap and more than 3.5 million metric tons of copper-bearing scrap.

To what extent China’s metals sector is impacted by its nonferrous scrap import barrier next year could depend on the health of its overall economy. As of late August, SMM reports, “Domestic copper consumption weakened in the third quarter, while domestic refinery supply increased month on month. The Yangshan copper premium [an index price tied to imported refined copper at a specific port in South China] kept falling in tepid trading. The liquidity of the whole foreign trade market dropped to a low point.”