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05 NOVEMBER 2018 AL CIRCLE

Limited supplies and weak consumptions to keep aluminium scrap market balanced in China in Q4 2018

EDITED BY : DEBANJALI SENGUPTA 2MINS READ

According to the latest update by Shanghai Metals Market, short supplies of invoiced domestic resources and limited inflows of seaborne resources are together contributing to the balanced market of aluminium scrap in China. Moreover, sluggish downstream automobile consumption is also attributing to China’s balanced aluminium scrap market.

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Invoiced resources continue to be short owing to the absence of proper tax policy for regulating post-consumer aluminium scrap across Chinese markets. Imports of aluminium scrap stayed at low levels as China introduced new impurity thresholds on imported waste and tariffs of 25 per cent on aluminium scrap from the United States.

Since when the tariff went into effect on April 2, the Chinese markets received around 700,000 tonnes of aluminium scrap from the US through the end of September, 34 per cent down from the same period last year, according to the data shared by China customs.

The new impurity thresholds on imported waste also restricted the entry of old cars scrap to China without being processed.

A Chinese trader who used to import aluminium scrap from the Middle East reported SMM that he did not receive any approval to import aluminium scrap post his application in May. This suggested the government’s tightening grip over imports.

Secondary aluminium producers held back from stockpiling large amounts of aluminium scrap as feedstock, given lacklustre consumption across the automobile sector and weak aluminium prices.

Data from the China Association of Automobile Manufacturers (CAAM) showed that both production and sales of automobiles in September stood some 11.6 per cent lower compared to the same period last year.

SMM expects this balance in aluminium scrap markets to carry over through the fourth quarter of 2018, as stricter limitations on imports, as supplies of invoiced aluminium scraps are expected to remain tightened before the tax policy is issued. Market pessimism on consumption across the automobile sector would sideline secondary aluminium producers.


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EDITED BY : DEBANJALI SENGUPTA 2MINS READ

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