How to Deal with China Increasing Scrap Copper Demand

SHANGHAI, Jul. 4 (SMM) – SMM held the Scrap Copper Forum 2012 in Ningbo on June 28-30, and experts reached consensus at the forum that China's scrap copper demand will continue to increase in the next five years, but the country's scrap copper imports are unlikely to rise significantly.

In their views, profits for imports of high-quality scrap copper are too small, while imports of low-quality scrap copper are restricted, both attributable to the fact China's scrap copper imports will not increase appreciably in the future.

China's scrap copper imports have maintained between 5-6 million mt in recent years, causing scrap copper reserves at exporting countries to decrease at a relatively fast speed. Despite sluggish economy, scrap copper suppliers in the US and Europe still have shown unwillingness in moving goods of high-quality scrap copper.

Against this backdrop, importing low-quality scrap copper is a better choice. However, importing large quantities of the seventh kind scrap copper is not only extremely difficult to pass the inspections by China Customs, but also has to shoulder the risk of polluting local environment during the dismantling process. In the meanwhile, as China's labor costs increase, dismantling costs are also growing, squeezing the already meager profits of scrap copper enterprises.

On this account, some experts suggested that domestic scrap copper enterprises can consider building dismantling factories in Vietnam and India. The seventh kind scrap copper can be first dismantled at a low cost in a third country and then exported to China in line with standard of the sixth kind scrap copper. In this context, the above mentioned scrap copper quality problems, environmental pollution issues, as well as dismantling costs woes can all be solved. Of course, these Chinese scrap copper enterprises have to obey the law of a third county and conduct comprehensive assessments on labors and other investment environments there.