China proposes 25% tariff on aluminium scrap imports from the US; scrap prices expected to jump further

China has started retaliating against the tariffs imposed by the U.S. on Chinese steel and aluminium products. The China’s Ministry of Commerce has proposed to levy a 25% tariff on aluminium scrap imports from the US in order to offset the losses brought by the newly announced US tariffs.

30% of China’s aluminium scrap imports come from the US and the extra tariff may increase procurement costs for Chinese secondary aluminium plants. SMM believes it is too early to make a conclusion on the after effect.  

The average price of imported Zorba scrap stood at US$1600 per tonne today. The prices stood at US$1550 per tonne in the beginning of March and it saw a jump on March 12. While primary ingot prices are dropping, imported scrap prices are on the rise leading to an increase in the price of secondary aluminium.

More negotiations are likely to take place between the two countries before the tariffs come into effect. Interested sellers may look to lower their offers by the time the tariffs are imposed.

In fact, aluminium scrap processing costs have already increased after the new scrap import and processing laws. China has limited the impurities to 1% this year, from the previous allowance of 2%. The complete ban on imports of Category Seven scrap materials, effective from the end of this year, would also see aluminium scrap imports drop in future.

In January and February, China imported about 93,000 tonnes of aluminium scrap from the U.S. In February, the country imported about 33,000 tonnes of scrap from the U.S., down 33% YoY. Total scrap import also dropped 29% to 120,000 tonnes.