The new standard of imported scrap aluminum to be launched in November

SHANGHAI, Oct 20 (SMM) — According to The Announcement on Regulating the Import Management of Secondary Brass Raw Materials, Secondary Copper Raw Materials and Secondary Casting Aluminum Alloy Raw Materials, aluminium raw materials that meet the requirements of Recycled Casting Aluminum Alloy Raw Materials (GB/T 38472-2019) are not solid wastes and can be imported freely, with the tariff code of 7602000020.

Therefore, in principle, the import of scrap aluminum has been liberalized, and what is needed is not the direction but the influence of quantity, so it is necessary to pay attention to the new tariff code and the specific implementation of the previous Secondary Aluminum Alloy Raw Materials (GB/T 38472-2019).

In terms of prices, the current domestic price increase of ADC12 aluminum alloy ingot will slow down, and the prices will remain stable in the near term. After import window of scrap aluminum opens in November, the price may drop to some extent. The main reason for its decline is that there were more than 100,000 mt of scrap aluminum piling up overseas. Once a large amount of scrap aluminum is released into China, the relevant carriers may sell a large amount of scrap aluminum and aluminum alloy ingots to grab orders, leading to a significant decrease in the market prices.

Regarding the raw materials of Secondary Casting Aluminum Alloy Raw Materials (GB/T 38472-2019), the restrictions on the imported raw materials mainly lie in two aspects. One is the change of definition, with the inclusion of secondary aluminum ingots. In addition, specific requirements to be focused on include aluminum and aluminum alloy content, metal amount and metal recovery rate, as well as chemical composition. As for other requirements they are relatively easy to be met. The two requirements correspond to the two main factors of the pricing standard of domestic waste aluminum market, namely water yield and composition.

The launch of the new standard means the liberalization of the import of scrap aluminum, which is a directional change, that is, it is expected that the quantity of scrap aluminum imported in Q4 will no longer decrease compared to the same period. It will lead to the narrowing of the price gap between scrap aluminum in the domestic and overseas markets, which will reduce the cost of domestic secondary aluminum in the future, and reduce the competitiveness of imported aluminum alloy ingots on the other hand.

However, it is worth noting whether the new tariff No.760200020 includes secondary aluminum ingots and whether the requirements are as mentioned in the standard. In addition, related tariff issues will directly affect the import efficiency and quantity of scrap aluminum. In addition, whether traders can import directly will also determine the speed of imported scrap aluminum flowing into China.

The impact of the possible liberalization of imported scrap aluminum on aluminum prices mainly lies in the previous market's expectation that supply of secondary aluminum will be insufficient in Q4 and beyond, and that primary aluminum will be replaced. This expectation may be deviated due to the liberalization of imported scrap aluminum, which depends on the import volume. The actual consumption of primary aluminum and the impact of the implementation rules of imported scrap aluminum on the import volume will be monitored by SMM aluminium research team.