SHANGHAI, Jul. 27 (SMM) – China will forbid imports of “category 7” scrap metals, which cover scrap electric wire & cable, scrap motor and bulk scrap hardware, from the end of 2018, SMM has confirmed with a source from China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA). 

How will the impact ban affect aluminum scrap imports and aluminum prices?    

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SMM survey found imported aluminum scrap is used mainly to produce secondary aluminum alloy, with small amounts used to produce aluminum billet and plate/sheet, strip. 

Most secondary aluminum producers use shredded auto aluminum under “category 6” shredded aluminum scrap (HS code 76020000). Most secondary aluminum producers in Jiangsu, Guangdong and Zhejiang, major consumers of imported aluminum scrap, also use shredded auto aluminum. Only a few small and medium secondary aluminum producers in Zhejiang’s Ningbo and Taizhou use copper scrap and aluminum scrap under “category 7” from dismantling companies in Taizhou as raw materials, whose capacity take up less than 10% of national total.  

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Secondary aluminum producers in Ningbo told SMM that aluminum scrap under “category 7” is not irreplaceable. Some producers add copper scrap under “category 7” in secondary aluminum production. After the ban takes effect, those producers could turn to aluminum scrap under “category 6”. 

Imported aluminum scrap used by major secondary aluminum producers, including Yechiu, Boyuan Metal, etc. is mostly shredded aluminum scrap under “category 6”. Hence, the import ban will have little impact on consumption of imported aluminum scrap, SMM understands. 

Customs data showed China’s imports of shredded aluminum scrap fell from 2.85 million tonnes in 2010 to 1.92 million tonnes in 2016. 

Aluminum scrap supply in China totaled 7.45 million tonnes in 2016, of which less than 30% was imported aluminum scrap. Aluminum scrap imports will fall further with growing supply in domestic market and improved recycling system, SMM predicts. 

To sum up, the ban will have limited impact on imported aluminum scrap market. The impact is simply to add to costs at some secondary aluminum producers. For now, aluminum scrap prices are little affected. After the ban takes effect, prices for aluminum scrap under “category 6” or domestic aluminum scrap might get some boost. SMM sees no impact on aluminum prices from the ban.   

Customs data sowed China’s shredded aluminum scrap imports under processing trade with supplied materials and processing trade with imported materials totaled 616,000 tonnes in 2016, almost 1/3 of total imports. 

However, it is only a matter of time for China to forbid aluminum scrap imports under processing trade with supplied materials and processing trade with imported materials. Secondary aluminum producers have made preparations for possible ban on aluminum scrap imports under processing trade with supplied materials and processing trade with imported materials, though.  

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