SHANGHAI, Sep 25 (SMM) – China earlier this week issued a fresh batch of import quotas of 32,940 mt for newly restricted high-grade aluminium scrap.
According to the list released by the Solid Waste and Chemical Management Centre under the Ministry of Environmental Protection on September 23, two of the nine aluminium scrap users in the latest batch had been granted import quotas in the previous batches.
Delta Aluminium Industry Co., Ltd. in Zhaoqing city of Guangdong province, was awarded only 9,000 mt of aluminium scrap import quotas in the latest batch, less than one-sixth of 62,230 mt in the batch released in July.
This is all the quotas the major secondary aluminium producer has obtained so far since imports of so-called Category 6 aluminium scrap, which have a higher Al content, were restricted from July 1, and sparked fears that Chinese authorities will sharply scale back import quotas for aluminium scrap in the remainder of the year.
A significant drop in the issuance of import quotas is set to exert great pressure on Chinese aluminium scrap users. SMM calculations showed that one-sixth of import quotas that have been granted for newly-restricted, high-grade aluminium scrap but exclude the latest batch came in at about 60,000 mt, down 83.8% from realised imports of aluminium scrap in the fourth quarter of 2018.
China has slapped a duty of 15% on aluminium scrap imports via general trade, prompting Chinese users to import the material via processing trade.
A potential supply shortage of seaborne aluminium scrap is set to drive Chinese scrap users to domestic materials, pushing up prices which are already higher than the market overseas.
Import quotas for aluminium scrap are widely expected to shrink in the fourth quarter, but how significant the decline will be remains uncertain.