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Latest Chinese tariffs to affect copper scrap imports from US

SMM Insight 01:27PM Aug 09, 2018 Source:SMM

SHANGHAI, Aug 9 (SMM) – China’s latest 25% tariffs on $16 billion worth of US goods starting August 23 are expected to deter copper scrap imports, benefiting consumption of domestic refined cargoes, SMM believes.   

The imposition was announced on August 8, in response to Trump administration’s 25% tariffs on $16 billion worth of Chinese goods that will go into effect on the same day. 

While copper scrap was not included in some $60 billion of US imports that would face 5-25% of tariffs according to an announcement on August 3, the product was listed this time. 

The US has been an important supplier of copper scrap for China, but its supply shrank on a yearly basis from 2013 to 2017. The supply stood at 535,000 mt in physical volume last year, 15% of China’s total copper scrap imports. In 2013, the US-imported copper scrap registered at 956,800 mt in physical volume, taking up 22% of the total.

However, as China’s overall copper scrap imports fell sharply this year due to stricter restrictions on Category Seven imports, the proportion of US-imported materials rebounded.

From January to April, copper scrap imports from the US stayed flat on the year, at 166,400 mt in physical volume. This accounted for 22.5% of total imports. 

Among the copper scrap imports in March, the highest monthly imports so far this year, Category Seven and Six cargoes from the US stood at 19,000 mt and 28,000 mt, respectively. These took up some 23% and 18% of total imports that month. With an average copper content at 58%, the US materials translated to 27,500 mt in metal volume.

The top three types of US-imported scrap in March were scrap motor with shell, #2 copper scrap, and brass. Import volumes of scrap motor with shell registered at 14,000 mt, #2 copper scrap at 12,000 mt, and #1 copper scrap at less than 3,000 mt. While scrap motor with shell is listed as the restricted Category Seven copper scrap, the large amount showed in March’s data means that China still imported a fair volume of Category Seven copper scrap. Most bare bright copper and #1 copper scrap were consumed in the US domestic market, SMM learned.

Other listed metals scrap products in this round of tariffs include scrap of nickel, aluminium, zinc, tin, tungsten, magnesium, stainless steel, alloy steel, and tin-plated steel. Limited impact is expected as China imports little such products from the US.

Given a 25% tariff on US-imported aluminium scrap imports effective on April 2, China’s aluminium scrap imports stayed at a low level during April-June and are expected to remain so in July. Volumes from the US accounted for some 30% of overall aluminium scrap imports and about 50,000 mt of imports would be affected every month. Most domestic smelters import materials for further processing before reexporting, which are exempt from such tariffs.

Data from China Customs showed that the country imported 110,000 mt of aluminium scrap in June, little changed from May but 41.1% lower than the same period in 2017. This brought the import volumes to 840,000 mt during the first half of the year, down 21.7% year on year.

Zinc smelters mostly use ore instead of scrap as raw materials, while only 8 mt of nickel scrap came into China last year. From May 2017 to April 2018, the country imported 261 mt of tin scrap from the US.

 

Key Words:  Trade war   Tradeflow   Copper