Domestic secondary aluminium producers to get little impact from China’s proposed ban on scrap metal import

<p>A source from China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA) has confirmed that China will ban imports of &ldquo;category 7&rdquo; scrap metals, which cover scrap electric wire &amp; cable, scrap motor and bulk scrap hardware, from the end of 2018, an SMM report says.&nbsp;</p> <p style="text-align: center;"><img style="vertical-align: middle;" src="http://www.alcircle.com/uploads/images/talon.jpg" alt="News" width="350" height="263" /></p> <p>In China, aluminium scrap is imported mainly to produce secondary aluminium alloy, with a very insignificant amount used for making aluminium billet and plate/sheet, strip. Most secondary aluminium producers in China from Jiangsu, Guangdong and Zhejiang, which are the major consumers of imported aluminium scrap, use shredded auto aluminium under &ldquo;category 6&rdquo; shredded aluminium scrap.</p> <p>Imported aluminium scrap is used mainly to produce secondary aluminium alloy, with small amounts used to produce aluminium billet and plate/sheet, strip.&nbsp;Most secondary aluminium producers in China including in Jiangsu, Guangdong and Zhejiang, major consumers of imported aluminum scrap use shredded auto aluminium under &ldquo;category 6&rdquo; shredded aluminium scrap.</p> <p>Only a few SME sector secondary aluminium producers in Zhejiang&rsquo;s Ningbo and Taizhou use copper scrap and aluminium scrap under &ldquo;category 7&rdquo; from dismantling companies in Taizhou as raw materials. Their capacity contributes less than 10% of national total. &nbsp;Those secondary aluminium producers are ready to turn into aluminium scrap under &ldquo;category 6&rdquo; if the ban takes effect, as said by SMM.&nbsp;Hence, SMM understands that the import ban will not have much impact on consumption of imported aluminium scrap.&nbsp;</p> <p>Customs data showed China&rsquo;s imports of shredded aluminium scrap fell from 2.85 million tonnes in 2010 to 1.92 million tonnes in 2016 which indicates consumers are focusing on domestic scraps and domestic recycling system is improving.&nbsp; Aluminium scrap supply in China totalled 7.45 million tonnes in 2016, of which less than 30% was imported aluminium scrap. Shredded aluminium scrap imports make up 1/3 of total imports.&nbsp;</p> <p>The ban can add some extra costs to some secondary aluminium producers, but right now aluminium scrap prices are little affected. Once the ban takes effect, aluminium scrap prices under &ldquo;category 6&rdquo; or domestic aluminium scrap might get some boost. Secondary aluminium producers have already started preparing for possible ban on aluminium scrap imports under processing trade with supplied materials and processing trade with imported materials.</p> <p>{googleAdsense}&nbsp;</p> <p>The ban announcement however created a concern in the U.S. About $5.6 billion in scrap commodities exported from the United States to China in 2016 alone. The country feels a ban on scrap imports will result in the loss of jobs and closure of many recycling businesses throughout the United States. They also fear this will impact the smooth functioning of the recycling industry in the U.S. The Institute of Scrap Recycling Industries, Inc. (ISRI) President Robin Wiener recently released a statement saying &ldquo;a ban on imports of scrap commodities into China would be catastrophic to the recycling industry&rdquo;.</p> <p>There is a possibility that the scrap import ban by China is one kind of fitting reply to the restrictive measures taken up by the U.S. on the import of steel and aluminium products from China.&nbsp;</p>