SHANGHAI, Sep 18 (SMM) – China's imports of aluminium scrap rose 17.9% from a year ago but dipped 21.5% from a month ago to stand at 143,000 mt in July, the month that restrictions on Category Six materials took effect, showed data from China Customs.
Import rush in June before China restricted imports of Category Six aluminium scrap accounted for the month-on-month decline in the imports in July. Imports were higher from a year ago as volumes in July 2018 fell after China imposed an additional tariff of 25% on US aluminium scrap in April 2018. American aluminium scrap took up about 30% of China’s total imports before the higher tariff.
SMM expects imports of aluminium scrap to rebound on the month and the year in August, as the latest two batches of import quotas roughly unchanged from imported volumes in the third quarter of 2018, and covered almost all major importers. Those importers did not receive the approvals for the latest batch of quotas until the end of July.
Aluminium scrap imports in September, however, are expected to fall significantly amid wide speculation of intensified import restrictions in the fourth quarter.
While aluminium prices rallied in August, low inventories of aluminium scrap, overcapacity of secondary aluminium, and limited improvement in downstream consumption squeezed margins at secondary aluminium producers. This, coupled with domestic stricter controls on waste imports, will likely prompt overseas aluminium scrap to enter China in the form of aluminium alloy ingot products.
The recyclable amount of aluminium scrap in China grew with domestic consumption of primary aluminium. But the market has yet to see a significant increase in aluminium scrap supply, due to intensified environmental curbs and smaller profits in the secondary industry. This, together with lower imports of seaborne scrap, caused a regional supply shortage of aluminium scrap.
SMM believes that near-term supply of aluminium scrap in China will unlikely to rebound significantly, and overseas materials will be the main source of supply to ease domestic tightness.
