According to customs data, the total imports of aluminium scrap from January to February were 289,000 mt, up 19.2% YoY. The total imports in January increased by 68% YoY to 171,000 mt, and that in February decreased by 16.1% YoY to 118,000 mt.
Imports of aluminum scrap from Malaysia reached 54,000 mt in Jan-Feb, accounting for 18.7% of China’s total imports, followed by Thiland (39,000 mt, 13.6%), Japan (30,000 mt, 10.4%), the UK and the US combined (46,200 mt, 16%).
In recent years, domestic aluminum scrap processing and utilization capacity increased YoY. China has become a major aluminum scrap processing country, with the annual imports at the forefront of the world. However, as domestic policies for the import and export of metal scrap were insufficient, imported aluminum scrap and other solid waste affected the domestic environment. Since 2017, China's main sources of aluminum scrap imports were EU, US and other developed countries with large aluminum consumption. China introduced relevant policies for imported solid waste, which changed the import rules and volumes. In December 2018, the Ministry of Ecology and Environment, the Ministry of Commerce, the National Development and Reform Commission, and the General Administration of Customs made the following adjustments to the "Catalogue of Solid Wastes that Can Be Used as Raw Materials without Restrictions on Imports" and the "Catalogue of Solid Wastes that Can Be Used as Raw Materials with Restriction on Imports": 1. Other aluminum scraps (760200090) were adjusted to "Catalogue of Solid Wastes that Can Be Used as Raw Materials with Restrictions on Imports". Since its implementation on July 1, 2019, the import of aluminum scrap has been completely banned, which dragged down the imports from October 2019 to the end of 2020. The imports fell to 823,000 mt in 2020 and reached the lowest of the past ten years.
In October 2020, China issued regulations on the import management of secondary copper and brass raw materials and secondary casting aluminum alloy. The secondary casting aluminum alloy raw materials that meet the standards of "Secondary Casting Aluminum Alloy Raw Materials" (GB/T 38472-2019) are not solid waste and can be imported. The US has been China's largest source of imports before the end of 2020. The implementation of import management of secondary casting aluminum alloy raw materials in October 2020 promoted the standardized recycling of domestic high-quality secondary raw materials, thus some aluminum scrap with unclear classification and high impurities from the US and other regions were difficult to enter China. In order to meet import standards, in Southeast Asian countries such as Malaysia, companies classify primary solid waste, screen it, and then transfer it to Chinese market. The implementation of this policy also marks a turning point for the increase in imports from Southeast Asia.
The import of aluminum scrap from the EU also deserves attention. The EU is also one of the main import sources of domestic aluminum scrap. The EU has advocated the development of a circular economy for many years. The aluminum recycling rate is at the forefront of the world. The total imports from the EU in 2023 were approximately 300,000 mt, accounting for 17% of the total, overtaking Malaysia to rank first. Although the recent Red Sea shipping crisis led to rising freight charges on imports from the EU, the total imports from the EU in Jan-Feb still accounted for about 16.5% of the total. Since the EU entered the carbon tariff transition period on October 1, 2023, local aluminum processing companies in the EU paid more attention to the recycling of secondary aluminium alloy. The demand for aluminum scrap from EU in Asia was still rigid, tightening the supply in EU and pushing up prices. As the demand for alloy ingot in Europe slowly recovered, greater challenges were expected. Alloy ingots prices remained stable, but aluminum scrap prices fluctuated greatly, further narrowing the profit margins of local alloy producers.
From Jan-Feb, 189,600 mt of aluminum scrap were imported by Guangdong, accounting for 65.7% of the total. 67,600 mt were imported by Zhejiang, accounting for 23.4%.
As domestic aluminum products have not yet entered the centralized retirement cycle, the domestic aluminium scrap supply can hardly meet the huge domestic secondary aluminum alloy processing capacity. China may maintain a net import of aluminum scrap, and the monthly import were affected by the supply of overseas aluminum scrap and the price difference between domestic and overseas. The cost of imported aluminum scrap was lower than in the domestic market since 2024. The average price of imported aluminum scrap in Jan-Feb was approximately $1,983/mt, which was approximately 14,120 yuan/mt (not taking into account tariffs, value-added tax and other miscellaneous charges). The average price of shredded tense in Guangdong in Jan-Feb was about 16,048 yuan/mt, excluding taxes. As such, imported aluminum scrap has a high cost advantage and profit margin. In March, operating rate of secondary aluminum alloy enterprises improved, boosting the demand for aluminum scrap. Domestic aluminum price swung on a strong note, stimulating the enthusiasm of holders to ship to China. Domestic aluminum scrap imports were expected to grow YoY in March.
