China’s tighter inspections on US scrap to drive up domestic aluminium scrap prices

SHANGHAI, May 7 (SMM) – China’s domestic aluminium scrap prices are likely to stay high with a small upward room in the short term as supplies with invoices would be further tightened after the authority imposed broad-based inspections on all scrap materials imported from the US from May 4, SMM believes.

China’s customs also put China Certification and Inspection Group (CCIC)’s operations at North America under A-level risk alert for one month from May 4. This means that China would not be able to import scrap from the US due to a lack of CCIC certificate for one month.

This move would see secondary aluminium producers that mainly rely on aluminium scrap imports suffer the most.

Many secondary aluminium producers increased their export sales earlier this year as China decided to levy a 25% tariff on aluminium scrap imports from the US sold or used in the domestic market. These producers still use US aluminium scrap due to a lack for resources from other origins.

With the new inspection requirement in place, these secondary aluminium plants are set to face strong pressure in delivering the export orders. There may also be production cut at these plants due to a lack of raw materials.

Supply of domestic aluminium scrap with invoices is therefore set to be tightened further, driving up the costs for all secondary aluminium producers in China.

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