On July 8, the Ministry of Ecology and Environment issued a letter seeking public comments on the "Announcement on Regulating the Import Management of Secondary Copper and Copper Alloy Raw Materials, Secondary Aluminum Alloy and Aluminum Alloy Raw Materials (Revised Draft for Comments)." This is a revised version of the "Announcement No. 43" issued in 2020, which addressed the import policy for secondary metals. The revised version takes into account the status and other industry standards of domestic secondary aluminum alloy development in recent years and has made revisions to the scope of secondary aluminum alloy imports. After the implementation of the new standards, high-quality raw materials such as wrought aluminum alloy and secondary pure aluminum are expected to be allowed for imports.
The changes between the revised draft for comments and the current Document No. 43 mainly involve revisions in various aspects, such as categories of secondary aluminum alloy, inspection standards, and index requirements. The key point of this revision is that it is expected to open up the import of overseas wrought aluminum alloy materials and secondary pure aluminum materials into the Chinese market. In addition, the revised version has added performance index requirements for secondary aluminum alloy and aluminum alloy materials. The specific requirements are as follows.
The revised version requires the aluminum of imported secondary aluminum or the physical content of imported aluminum alloy to be ≥91%. It also provides more detailed classifications for the size and conditions of inclusions. According to the SMM survey, overseas aluminum scrap shredding and screening companies can generally meet these requirements. SMM comments: In recent years, with the continuous support of domestic dual-carbon policies, the secondary metals industry developed rapidly. Domestic aluminum scrap deep processing capacity has expanded year by year, and the domestic aluminum scrap recycling system has been continuously improved. The supply of aluminum scrap has increased annually, but a large amount of aluminum scrap still needs to be imported from overseas to meet the growing demand of the downstream secondary aluminum alloy processing industry chain. According to customs data, the total import volume of aluminum scrap and shredded scrap in 2023 reached 1.753 million mt, up 15.7% YoY. From January to May 2024, the total import volume of aluminum scrap was about 809,800 mt, up 22.9% YoY. Whether this policy adjustment can increase the import volume of domestic aluminum scrap, SMM believes that the change in domestic aluminum scrap import volume is not only affected by policy adjustments but also by the cost and profit of overseas aluminum scrap imports. Since April 2024, the aluminum scrap markets prices have exceeded domestic ones, and the profit of aluminum scrap imports has declined significantly. The import enthusiasm of aluminum scrap traders has decreased, and the import volume of aluminum scrap in April and May declined MoM. However, if the policy can further relax the types of aluminum scrap imports, it will also somehow stimulate the aluminum scrap imports. Considering the expected price spread between domestic and overseas markets and the spot market circulation, SMM expects that the total import volume of aluminum scrap in 2024 may maintain a YoY growth trend, with the total import volume expected to increase to around 1.85 million mt.
Apart from the expected quantitative increase, the revision of the import policy, if implemented as scheduled, will have the following impacts on the domestic secondary aluminum alloy market: (1) It will somehow increase the variety of domestic aluminum scrap imports. Previously, domestic aluminum scrap imports mainly consisted of shredded tense used as raw material for secondary casting alloys. In the future, secondary wrought aluminum alloy and secondary pure aluminum raw materials that meet the regulations are expected to enter the domestic market. (2) It will unify the understanding of standards among relevant parties, delineating the boundary between aluminum scrap and high-grade secondary aluminum alloy raw materials. It will adhere to the overall national industrial policy and hold the line against the import of "foreign garbage.“ (3) It will provide an operational benchmark for the import, supervision, inspection, trade, and production units of secondary aluminum raw materials. It will unify and coordinate the understanding of high-grade secondary aluminum raw materials among regulators, producers, users, and third parties, ensuring and supporting the import of high-grade metal aluminum strategic resources. This will not only meet the regulatory and determination needs of customs and environmental protection departments, but also gradually improve the quality of imports, significantly reduce the number of solid waste identification cases, and greatly enhance customs clearance efficiency. (4) It will meet the industry's production demand for high-grade secondary aluminum alloy raw materials. It is of great significance for continuously promoting the utilization of high-quality secondary aluminum alloy resources at home and abroad, ensuring the stability of the strategic metal resource supply chain, practicing the concept of green, low-carbon, and circular development, and promoting the high-quality sustainable development of the industry.
