Fresh aluminium scrap import quotas for 2020 expected to lower the metal scrap prices post CNY

Shanghai Metals Market predicts Chinese aluminium scrap prices to fall after resuming from the Chinese New Year Holiday in late January, as fresh import quotas are expected to ease supply shortages and ensure demand in the first quarter of 2020.

On Monday, December 23, China’s environmental authorities issued the first batch of aluminium scrap quotas for 2020, permitting new buying and allowing some companies with cargoes left in limbo to claim shipments to domestic markets.

The initial 2020 import quotas have been awarded to eight more companies who obtained such allowances in 2019. In total, more than 50 companies have received the new quotas.

Under the new quota, the China Solid Waste and Chemicals Management Bureau allowed 275,465 tonnes of high-grade aluminium scrap imports, quadrupled from the cumulative quotas 68,549 in Q4 2019.

Liang Yi, aluminium analyst at SMM, noted that the aluminium scrap import quotas for Q1 2020 are expected to reach 300,000 tonnes, compared with 332,000 tonnes of imports in the same period last year.

For the entire year of 2020, the aluminium scrap import quotas are widely expected to account for 50 per cent of realised imports in 2019, meaning that there would be only about 400,000 tonnes of allowances for the rest of 2020 and 130,000 tonnes for each quarter.