China Al scrap users get sufficient import quotas for Q3, but uncertainty remains for Q4

SHANGHAI, Aug 15 (SMM) – Import quotas that China’s environmental authorities have granted to aluminium scrap users look sufficient for the third quarter, but are likely to sharply shrink in the fourth quarter, as the country aims to end all imports of solid waste by 2020.

The China Solid Waste and Chemical Management Centre, a unit of the Ministry of Ecology and Environment, on Wednesday August 14 issued import quotas for another 11,290 mt of newly restricted high-grade aluminium scrap, which brought the cumulative total to 372,476 mt.

From July 1, imports of so-called Category 6 aluminium scrap, which have a higher Al content, could not enter China, unless importers are awarded with quotas.

Quotas were mostly for Zhejiang’s Taizhou, Jiangsu’s Cangsong, Guangdong’s Foshan, Qingyuan and Zhaoqing, major hubs for aluminium recycling. Other firms are in Tianjin and Liaoning.

Authorities are expected to issue limitedly more import quotas for the third quarter, as most aluminium scrap users have obtained quotas.

SMM calculations showed that quotas issued so far are up some 5.7%, or 20,000 mt, from the third quarter of 2018, but down 27.5%, or 140,000 mt from the second quarter of 2019, as importers ramped up purchases before the restrictions came into force.

Sufficient quotas are set to give seaborne aluminium scrap users considerable advantages in terms of costs in the third quarter.

After such a grace period, environmental authorities are likely to substantially scale back import quotas, which will roil the market.