China issued import quotas for another 1,440 mt of aluminium scrap

SHANGHAI, Feb 6 (SMM) – China's environmental authorities on Wednesday issued the third batch of aluminium scrap import quotas for 2020, allowing 1,440 mt of high-grade aluminium scrap to enter China.

This brought aluminium scrap import allowances for this year granted so far to 284,449 mt. SMM does not expect the total quotas for Q1 to exceed 300,000 mt, even as more quotas may be issued.

SMM data showed that China imported 332,000 mt of aluminum scrap in Q1 2019.

China’s standards on recyclable copper, brass, aluminium alloy casting raw materials, which will exempt high-purity scraps from the licensed quota-based import system, will come into force on July 1.

This leaves aluminium scrap supply in Q2 at the risks of shortages, as authorities may sharply scale back their issuance of import quotas. China’s aluminium scrap imports for 2020 are widely expected to halve from last year.

China’s aluminium scrap market is expected to be well supplied in February, prompting scrap prices to follow refined metal lower, as the scrap users—secondary aluminium producers—are delaying their resumption of operations amid the novel coronavirus outbreak.

Most of secondary aluminium producers will reopen in the second week of February, while those in Hubei and Zhejiang, which are hit hard by the outbreak, will further delay their resumption. Compared to last year, the recovery of Chinese secondary aluminium producers from the Lunar New Year holiday is 7-10 days later this year.

With people deterred from travelling back to work, potentially low operating rates at secondary aluminium producers after their resumption are also likely to hurt demand for aluminium scrap.