SHANGHAI, Feb 20 (SMM) – China will offer tariff exemptions on copper concentrate and scrap, raw materials for copper production, that originate from the US, which is expected to have greater impact on the former than the latter.

Starting from March 2, China's tax authority will accept applications of domestic firms for the exemption of tariffs of 25% on US copper concentrate and scrap imposed in response to the US Section 301 tariff measures, within a year from the date of approval, according to the statement by the Customs Tariff Commission of the State Council.

China has almost stopped importing copper concentrate from the US since the 25% duty came into force in September 2018 amid the bruising US-China trade war. China customs data showed that there were no copper concentrate imports from the US since then, except for 91,000 mt seen in September 2019. The tariff deprived US copper concentrate of price competitiveness in the Chinese market, and drove American exporters to European buyers.

However, US copper concentrate’s market shares in China had already declined before the imposition of the tariff. China imported 433,000 mt of copper concentrate from the US in 2017, accounting for only 2.5% of the country’s total copper concentrate imports for the year.

With newly-commissioned smelting projects boosting China’s demand for copper concentrate, imports of copper concentrate grew in the past two years, as Chinese buyers turned to miners in South America.  

There were nearly 40,000 mt on average of US copper concentrate imported to China every month before the 25% tariff was imposed. While the exemption of the duty will not have great impact on copper concentrate supply in China, this move is set to help expand the source of copper concentrate supply to Chinese smelters, who have been grappling with low treatment charges amid tight ore supply.

Source: SMM

The impact from the tariff exemptions on the copper scrap market is likely to be more muted, however, as China’s copper scrap imports are restricted by the quota system.

The US was the biggest copper scrap supplier to China before China imposed a 25% tariff in 2018 in retaliation for the US duties on Chinese goods. The proportion of US copper scrap to China’s total copper scrap imports declined from a high of 25% in early 2018 to the lowest level of less than 2%, showed SMM calculations based on customs data.

Source: SMM

Southeast Asian emerged as a major transit region for copper scrap trades, as Chinese importers tried to avoid the tariff.

Chinese copper scrap importers showed little interest in the one-year tariff exemption, showed the latest SMM survey, as costs for transit trades were not high and as they have got used to transit trade operations.

The tariff exemption is expected to have limited impact on copper scrap imports to China, but the impending standards on recyclable copper raw materials are likely to give a significant boost to China’s copper imports, and the quality of copper scrap imports will also improve.

Seaborne copper scrap that meet the standards, effective from July, will be allowed to enter China without import quota restrictions.