SHANGHAI, Apr 1 (SMM) - The new value-added tax (VAT) policy took effect from March 1, 2022. Under the new tax law, waste utilisation companies need to pay an extra 3% VAT on raw materials than before, in order to enjoy an exemption of 30% output VAT for purchases, which led to a substantial increase in their costs. As a result, waste utilisation companies took a wait-and-see stance, and their enthusiasm for production was suppressed. Copper scrap suppliers rushed to clear their inventories before the new policy was implemented in order to minimise the potential risks brought by the new tax law, which tightened supply in March. The pandemic affected copper scrap recycling and dismantling, as well as shipments of finished products from waste utilisation companies.
According to customs data, China imported 272,700 mt of copper scrap from January to February 2022, a year-on-year increase of 42.22%. The imports in January and February were 162,900 mt and 109,800 mt respectively. The arrivals fell sharply in February due to the Chinese New Year (CNY), but are expected to pick up in March after the impact of seasonal factors has faded. However, heavy import losses discouraged importers from placing orders in early March. Some ports in south China were congested due to the pandemic, which caused the customs clearance to be extended to about 10-15 days. Therefore, the arrivals in April may be significantly affected. With greater efforts to control the pandemic and rising temperature, it is expected that the pandemic will be gradually brought under effective control, which will improve copper scrap recycling and imports, as well as the operating rates of waste utilisation enterprises. Given the rapid demand recovery, copper scrap supply will remain tight.
As of March 25, the CIF quotation of 1# secondary copper was￠14-16/lb below the COMEX July copper contract, and that of 2# secondary copper was￠30-322/lb below the same contract. US honey brass was offered at $6,900-6,950/mt. The CIF quotation of 2# copper wire nodule was 95.5-96% of LME copper, and that of bare bright copper was 97.5-98% of LME copper. The CIF quotations and consumption of imported secondary copper raw materials declined amid falling SHFE/LME copper price ratio.