SHANGHAI, Jul. 4 (SMM) – Shi Baowei, a senior analyst Qingyuan Huaqing Recycling Resource Investment & Development Co., Ltd., said that scrap copper output in Guangdong's Qingyuan City, a major city of scrap copper, has fallen in four years in a row with pessimism towards output in 2012. The continuous drop in this city's scrap copper output is actually the comprehensive reflection of unreasonable domestic policies in stead of contradiction with scrap copper imports.
Shi Baowei told SMM that scrap copper output in Qingyuan fell gradually from 2008 to 2011, standing at 860,000 mt, 750,000 mt, 680,000 mt and 500,000 mt, respectively. He predicts that scrap copper output will slip further in 2012.
Tight scrap copper supply overseas has pushed Qingyuan's scrap copper output into a dilemma. According to data, scrap copper imports in Qingyuan were only USD 200 million during January-April this year, down considerably YoY. Based on the estimation that the average price of imported scrap copper is USD 3,100/mt, scrap copper imports should stand at around 64,000 mt for the first four months of this year. “The proportion of Qingyuan's scrap copper output to China's total output already dipped from 27% to 19% in 2011, and is likely to fall further in 2012”, said Shi Baowei. According to sources, import policies on scrap copper are different by region in China and have resulted in higher prices of refined copper from scrap copper than that from copper concentrate. For instance, there are three policies in Qingyuan's restricting scrap copper imports. First, the taxation authority in Qingyuan levies a fixed 1.2% tariff on scrap copper importers, compared with preferential tax policies in Jiangxi. Second, the Guangdong Customs exerts different import policies on different companies, which has added to logistics costs. Third, the Guangdong Customs has a “three 100%” policy, namely, scrap copper imports will be 100% weighed, 100% checked, and 100% submitted to designated authority to inspect if there are any quality problems.
These policies, especially the third one, have greatly affected scrap copper importers in Qingyuan. In addition, customs clearance takes too long as few overseas scrap copper suppliers loaded goods according to domestic supervision and goods will be checked by a third party. At present, it generally takes 45 days for goods of scrap copper to arrive at Guangzhou port from the US by ocean shipments, and takes another 15 days for domestic enterprises to dismantle and process. However, copper prices may experience considerable volatility during the 60 days, which has undoubtedly heightened risks for China's scrap copper enterprises.