LME Copper Shoots Up 4% on China’s “Category 7” Scrap Metal Import Prohibition, SMM Reports

SHANGHAI, Jul. 26 (SMM) – The news that China will forbid imports of “category 7” scrap metals has been rumored for two months. On July 18, China notified the World Trade Organization that it will ban imports of 4 classes, 24 kinds of solid wastes by the end of this year, including plastics waste from living sources, vanadium slag, unsorted waste paper and waste textile materials. Scrap copper are not in the prohibition list.

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However, a news spread in the market from last night, which said that China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA) received a notice that the country will forbid imports of “category 7” scrap metals from late 2018, including scrap electric wire&cable, shredded motor and bulk hardware. “Category 7” scrap metals can enter consumer market after processing, while “category 6” scrap metals can enter the market directly.

Copper scrap is mainly used in production of blister copper, copper anode plate/sheet and refined copper at copper smelters and production of copper rod, plate/sheet, strip and bar at downstream producers. As such, LME copper surged by 4% with the news releasing.

The news has been confirmed by SMM.

China to Forbid "Category 7" Scrap Metal Imports in Late 2018

SMM predicts China to import 1.27 million tonnes of copper scrap (Cu content) in 2017 based on a 1.2 million tonnes of imports (Cu content) in 2016, including 750,000-900,000 tonnes or 60%-70% of “category 7” scrap metals. On the other hand, Guangdong is stricter on project approval for dismantling plants, SMM survey finds. The government postpones or even cancels import approvals.

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But, SMM indicates that the news will not make great impact actually.

First, “category 7” scrap metals may be transferred into “category 6” one with rising imports in recent years in one and a half years before the implementation of the policy.

Second, China will enter scrap copper recycling peak season soon, and about 50 urban mineral projects have been approved for being dismantled in the country after going bust. On the demand front, domestic copper scrap supply exceeds import in China’s market for now. So, China will reduce imports of copper scrap gradually.

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