China Guangdong Tightens Customs Checks on Metal Scrap

GUANGDONG, June 4 -- China's Guangdong province, a major destination for international copper scrap, is tightening customs checks on imports of metal scrap, trading sources said on Wednesday.

    Delays in clearing customs are reducing the amount of copper scrap available, they said, cutting importers' cash flow and spurring them to trim new orders.

    Traders said they believed the customs was cracking down on tax evasion by importers who might have misreported metal content in imported scrap, resulting in smaller payments of a 17 percent value-added tax.

    Metal scrap, including copper, aluminium and stainless steel, is not subject to import taxes in China.

    "There is a huge cargo congestion in Guangdong ports," a copper scrap trader said. "A lot of imports of copper scrap are lining up for the customs checks."The trader added some customers' imports that had arrived in early May were still waiting.

    "New orders are falling given clients placed a lot of orders in March and April and now the arrived cargoes are stuck in ports," the trader said.

    A trading source at a copper scrap importer for top smelter Jiangxi Copper said tightened customs checks had reduced supply, though China's imports of copper scrap hit a 6-month high in April.

    "The supply is not as much as we had expected."More than a quarter of Jiangxi Copper's refined copper production uses scrap as feed. The company plans to produce 800,000 tonnes of copper this year.

    Tight supply is supporting prices of copper scrap.

    Grade no. 1 copper scrap traded at around 37,900 yuan per tonne in Guangdong on Wednesday, up 11 percent from mid-May, which is bigger than the 9 percent rise for prices of spot refined copper.

    One importer said Guangdong's customs was also slowing checks on other tariff-free imports such as primary aluminium ingots, preferring instead to process imports that carried import taxes as it looked to boost revenues amidst reduced international trade.

    "Some took 10-14 days to get imports out of the customs, while a few could do that in 3-4 days, depending on your relationships with the customs," he said, referring to imports of primary aluminium ingot.

    Another importer said the firm was storing two containers of stainless steel scrap in Hong Kong to avoid long and strict customs checks in Guangdong.

    (Source: Reuters)