China grants 31,658 mt of copper scrap import quotas in fresh batch

SHANGHAI, Sep 24 (SMM) – Some 31,658 mt of copper scrap, or 25,326 mt in metal content based on a grade of 80%, received the green light in the latest batch of approvals for restricted metal scrap imports for 2019, according to the list released by the Solid Waste and Chemical Management Centre on Monday September 23.

The fourth batch of quota, following the import restrictions on high-grade Category Six materials on July 1, continued to shrink from the previous three batches, indicating China’s tighter controls on waste imports. 

While the latest release covered 31 importers in provinces of Guangdong, Jiangxi, Anhui, Zhejiang, and Fujian, about 60% of the quota went to the major metal recycling centre Zhejiang. 

The four batches of approval so far allowed a total of 484,217 mt of copper scrap to enter China, which equates to 389,274 mt in Cu content, according to SMM calculations.

SMM believes the latest release is more likely to be supplementary to the third-quarter quotas, rather than new quotas for the fourth quarter, as importers involved this time were mostly small companies and did not cover firms in the previous three batches. 

Major producers such as Ningbo Shimao, Jintian, and Zhejiang Judong should be prioritised if import quotas for the fourth quarter are granted. 

Sources also told SMM that the latest quota was for the third quarter instead of the fourth quarter, as SMM surveyed. 

The volume of quotas granted so far generally match the actual copper scrap imports during the third quarter last year, which is in line with the expectations of progressive restrictions on waste imports. 

There are more quotas expected for the fourth quarter, but the volumes would be slashed from that in the third quarter, SMM believes. This is set to further tighten up the scrap market and prop up copper prices. 

SMM learned that companies have filed applications for importing copper scrap in October-December. 

The market also took a pessimistic outlook on the nearby import quotas, with some companies expecting a more than 50% reduction in the approved volume on a quarterly basis. 

Based on customs data and SMM calculations, China imported some 723,000 mt in metal content of copper scrap in the second half of 2018, with Category Six materials accounting for 605,000 mt. 

This indicated a gap of around 330,000 mt in import quotas this year, which contained 220,000 mt of Category Six copper, compared to the quotas awarded so far.

An SMM survey found that, as of September 24, only some 60% of the first two batches of quotas have been materialised and quotas in the third release on August 14 remained unused, due to a shipment period of a month or so. 

A low utilisation rate of the third-quarter quotas is expected to weigh on any quota to be granted for the December quarter. 

Frontloading in the second quarter kept major producers well-supplied. This is likely to see current quotas being able to sustain normal operation at those producers in October. 

SMM expects domestic copper scrap imports to rise in September-October as firms with fresh quotas will start to bring in scrap copper from overseas.