New policy on customs codes of secondary copper (brass) raw materials: Impact analysis on copper scrap import

SHANGHAI, Oct 20 (SMM)—On October 19, the Ministry of Ecology and Environment issued the Announcement on Standardising Import of Raw Materials of Secondary Copper and Secondary Cast Aluminium Alloy. Details are as follows: 

1. Raw materials of secondary brass, secondary copper and secondary cast aluminium alloy that meet the standards of Secondary Brass Raw Materials (GB/T 38470-2019), Secondary Copper Raw Materials (GB/T 38471-2019) and Secondary Cast Aluminium Alloy Raw Materials (GB/T 38472-2019) are not solid wastes and can be imported freely.

2. The customs commodity codes of secondary brass raw materials, secondary copper raw materials and secondary cast aluminium alloy raw materials are 7404000020, 740400003 and 7602000020 respectively.

3. Raw materials that do not meet the standards of Secondary Brass Raw Materials (GB/T 38470-2019), Secondary Copper Raw Materials (GB/T 38471-2019) and Secondary Cast Aluminium Alloy Raw Materials (GB/T 38472-2019) are prohibited from importing, except for those who have obtained the import license of copper scrap and aluminium scrap which can be used as raw materials.

4. This announcement shall come into effect on November 1, 2020.

At present, the import quotas are valid only within 2020, and no new quotas would be approved for 2021, which means copper scrap will be prohibited from importing by the end of 2020 and importers will only have to import high-quality copper scrap in accordance with the policy of secondary copper resources. However, more than 90% of imported copper scrap can meet the import standards for secondary copper. In addition, without the limit of quotas, issues such as rejections of shipping from shipping companies can also be avoided.

In recent years, many ingot-melting plants have been built in Southeast Asia and Middle East, and substandard solid waste can be imported after being melted in these plants, which contributed to the continuous and rapid rise in copper ingot imports. But relevant import structures will be influenced after the new policy takes effect.

China is a country with copper shortage issues. The secondary copper (brass) policy has eased worries of many companies at home and overseas, and encouraged them to import and this has made the domestic market more attractive to foreign traders. The total amount of copper scrap flowing into the Chinese market is expected to increase in the coming years. 

Some industry experts told SMM that it is large-scale producers that can provide standard raw materials, and their orders mainly come directly from processing enterprises, and small traders may find it difficult to find cargo suppliers at the initial stage. But copper scrap imports are likely to rise significantly next year when the market get familiar with the new policy.

The customs has yet to unveil relevant tax rates and detailed regulatory requirements for secondary copper (brass) raw materials. Import policies of copper scrap are usually formulated for processing enterprises, and this leads to a question that whether traders could also be exempted from any limits and import secondary copper freely. If so, domestic copper scrap supply would be more market-oriented. SMM has compared the regulatory policies for copper scrap and secondary copper, as shown in the table below:

SMM believes that as the Ministry of Ecology and Environment has made it clear that standard secondary brass and secondary copper raw materials are not solid waste and can be freely imported, they should not be subject to the AQISQ certificate.

AQISQ refers to the registration certificate of the consignee of the international trade contract for importing solid waste that can be used as a raw material. In accordance with the requirements of AQSIQ No. 119 and Announcement No. 91, domestic consignees engaged in the import of waste materials should obtain prior registration.

In order to receive certification, the importer needs to have a processing and utilization enterprise with legal import management qualification.