SHANGHAI, Mar. 27 (SMM) – China's low grade scrap copper importers cut over 1/5 orders since China Customs examine more strictly since early March. Chinese government set barriers for scrap metal imports to cope with environmental pollution problems.
China is global largest refined copper consuming and producing country, and scrap copper is raw material for semi-products, copper semis and refined copper.
According to the website of General Administration of China Customs, it will examine scrap metal imports strictly for 10 months, which lack import permits or fail scrap material import requirements.
The move aims to crack down on smuggling and illegal activities, but further measures have yet to decide.
"Orders were rejected this month."said one international trade company.
"Orders from Guangdong decreased most sharply."
Scrap copper imports by Guangdong accounted for nearly 40% of domestic total 4.9 million mt, most of which were low grade scrap copper.
The trade company anticipates China's scrap copper imports in 2Q will fall, but did not estimate the decline, and reported its low grade scrap copper orders dropped by over 20%.
A senior analyst from Antaike said falling scrap copper supply will prompt producers to buy copper concentrate instead of scrap copper.
The analyst believes plants will increase purchases for refined copper in April at earliest to substitute scrap copper, and estimates Guangdong will rely on more than 500,000 mt/yr of refined copper capacity overseas.
China's demand growth will help absorb some international oversupply, so as to support international copper prices.
Traders reported China Customs had implemented examinations before, but Guangdong Custom examines more strictly, and even restricts some imports.
According to a trader who does business with a European supplier, one of its customers from Guangdong had required the company not to deliver contract goods because the grade does not meet the requirements for imports.
The trader said importers from Guangdong may shift to high grade scrap copper, but purchases will be modest due to global supply tightness.
The analyst from Antaike said as advanced economies have been sluggish, building actitives decreased significantly, and this reduced high grade raw material supply.
"Stricter examinations will cause imports to fall, and supply in Guangdong will decrease." Said one scrap copper trader from Guangdong. (Edited by SMM)