Imports of Scrap Aluminum Increase on Higher SHFE/LME Aluminum Price Ratio

SHANGHAI, Nov. 3 (SMM) -- Imported scrap aluminum prices became more advantageous than domestic scrap aluminum prices as the SHFE/LME aluminum price ratio climbed recently, and some secondary aluminum enterprises increased purchases of imported scrap aluminum as a result. 

SMM sources report that the SHFE/LME aluminum price ratio climbed to above 7.5, helping improve the cost advantage of imported scrap aluminum. Current CIF prices for zobra (93% metal content, 3% Cu content) are USD 1,690/mt, RMB 500/mt lower than domestic prices, while prices for imported high-quality tense and taint are also lower than domestic prices. As a result, some secondary aluminum enterprises considered increasing imports of scrap aluminum in an effort to cut costs.

However, increases in imports by secondary aluminum enterprises were limited due mainly to uncertainties over current aluminum prices and risks arising from the lengthy shipping period between 30-45 days. In addition, the import of scrap aluminum requires the full payment after receipt of bill of lading, which makes many enterprises unable to import large amounts of goods given tight cash flows. Furthermore, lower quality of imported scrap aluminum and higher customs clearance costs also help restrict China’s imports of scrap aluminum.