SHANGHAI, Mar 29 (SMM) – Copper cathode consumption in China is likely to receive a boost from the government’s ban on copper scrap imports.
In December 2018, the Ministry of Ecology and Environment (MEE) said that Category Six solid waste would be restricted from being imported into the country from July 2019, with a grace period to cut solid waste imports to zero by 2020.
This means that importers have to receive green light from authorities before they transfer seaborne Category Six metal scrap into China, from the second half of this year. Some firms have applied for approval, but no one has received approval, SMM learned.
The environmental watchdog is also considering categorising some Category Six materials as renewable resources to allow those imports amid the ban on solid waste imports.
For copper scrap, Category Six under HS code of 7404000090, has average copper content of 76% and can be fed into furnaces without being dismantled first.
SMM expects that good-quality copper scrap with copper content of 94% and above, including bare bright copper, #1 copper scrap, #2 copper scrap, might be able to join the list of renewable resources.
Such materials accounted for 65.3% of copper scrap imports by tonne in copper content in January-February. Most of those imports went to smelters.
Brass scrap, however, is unlikely to be spared by the environmental authorities. Brass scrap, with copper content of 65%, took up 30.9% of copper scrap imports by tonne in copper content in the first two months of 2019.
Brass rod firms in China would see their sources of raw materials limited by the solid waste ban from next year, prompting them to use copper ingots that is made from copper scrap or copper cathode and zinc instead.
Based on import volumes in 2018, copper scrap imports would be lowered by some 400,000 mt in copper content if brass scrap imports are banned. The recovery rate of domestic copper scrap currently stands at 60%, which is unlikely to make up the supply deficit generated by the ban on brass scrap imports.
This, SMM expects, is set to boost consumption of copper cathode.
From the start of this year, China has completely forbidden imports of Category Seven copper scrap under HS code of 7404000010 to enter the country. Such materials has average copper content of 24% and has to be dismantled before being used by smelters or processors.
Data from China Customs showed that China’s imports of copper scrap in January-February grew some 11% from a year ago in terms of mt in copper content, even as volumes in physical content declined some 27%.
The surprise increase in imports of copper scrap in copper content might be attributed to higher quality and the rush for Chinese recyclers to import copper scrap before Category Six materials being restricted from July.
SMM expects copper scrap imports in copper content to dip in the second half of this year, with the greatest impact across small recyclers.
In 2019, the Category Six restriction is likely to have limited impact on China’s imports of copper scrap.