[LME Week] tightening of scrap copper imports has less impact on copper prices than expected

SMM May 15: LME copper prices are currently in a triangular collation, nearly two trading days have fallen. Growing trade tensions between the United States and China, the world's largest consumer of metals, are the focus of market attention.

Zhou Yanting and Liu Sfang, senior advisers at Wood Mackenzie, a research firm, said the ban would only take effect by the end of the year and that most of the impact would be achieved by 2018.

Seven kinds of scrap copper (customs code 74040000 10) belong to the permitted waste with restricted import, and the import of such waste requires relevant approvals, mainly including waste cables, waste electrical machinery, waste transformers and waste hardware with low grade, etc. the import of such waste copper (Customs Code 74040000 10) is restricted to the import of licensed waste. It must be reprocessed, such as disassembly and sorting, before it can be used by a smelter or copper processing plant. Imports of seven types of waste have fallen sharply this year.

Six types of scrap copper (customs code 74040000 90) are automatic import licenses, mainly including high-grade 1 # bright wire, 2 # copper, brass, etc., and the main types of waste copper (customs code 74040000 90) are automatic import licenses, mainly including high-grade 1 # bright wire, 2 # copper, brass, etc. Among them, high grade copper and brass with clear classification and less impurities can be directly processed and utilized. Some of the lower grade copper and the grade of miscellaneous brass need to be re-smelted. Six types of waste are not prohibited. Mr Woodmackenzie said China's growing domestic supply of scrap metal would fill most of the gap.

While imports of Category 7 copper waste will decrease in 2018, Wood Mackenzie expects imports of Category 6 copper waste to increase as there will be waste disposal capacity outside China. At the same time, the domestic supply of scrap metal is expected to accelerate this year.

The import ban will result in the loss of about 300000 tons of copper in imported waste in 2018. Given the expected increase in domestic scrap metal supply this year, the overall net impact of China's copper scrap supply will be much smaller, at about 100000 tonnes.

By 2019, China's copper waste supply will return to positive growth, with an increase of about 70,000 tons.

According to SMM statistics, China's imports of scrap copper were 220000 tons in March. the Spring Festival factor in February rose 69.5 percent from a month earlier, down 38.5 percent from a year earlier, and fell nearly 40 percent from a year earlier in the first three months of this year.

The volume of the first 10 batches of restricted imports decreased by 84% year on year in the first ten batches of 2018 compared with the same period last year.

According to the first 10 batches of solid waste approvals restricting imports this year, the volume of waste copper related enterprises has been 125700 tons, and a single batch has reached a new high this year after the last high. A total of 463600 tons were examined in 10 batches this year, down 84 percent from the same period last year, a decline that continues to rise from the previous year.

SMM believes that on the policy side, from the tightening of copper import policy to the "restriction" to "prohibition" of 16 types of solid waste, it reflects China's determination to implement fixed waste management and environmental protection policies. The volume of copper imports in the first quarter of 2018 and the volume of restricted copper imports in the first 10 batches of this year are evidence of market expectations for copper imports. At present, there is still nearly seven months to go before the implementation of the two major policies. gradually slowing down the pace of waste copper imports should be a main theme this year. the waste copper market has been in a relatively sluggish pattern so far this year, and the high probability will continue to be maintained.