Sweeping tariffs & restrictions brought Y-o-Y decline to China’s aluminium scrap import in June

China’s aluminium scrap import in June remained at a lower level given the sweeping tariffs and restrictions Chinese aluminium scrap imports. Shanghai Metals Market believes that this downtrend is likely to stay even in the month of July on continued trade disputes between China and the United States.

The latest data from China Customs show that the country imported 110,000 tonnes of aluminium scrap in June, without registering much change from May but 41.1 per cent lower from 155,000 tonnes in the same period of 2017. This brought the import volume in the first half of CY2018 to 840,000 tonnes, 21.7 per cent down from 10, 24, 800 tonnes in the corresponding period of 2017.

The below graph shows China’s scrap import volume in June 2017 and 2018

The below graph shows China’s scrap import volume in H1 2017 and H1 2018.

This significant fall in scrap import to China is primarily because of the new 25 per cent tariff on aluminium scrap imports from the US in early April, in response to trade disputes between the two countries.

The United States accounted for some 30 per cent of the total aluminium scrap imports to China. With the implication of the new tariffs, about 50,000 tonnes of imports are estimated to be affected every month, according to SMM.

Most US aluminium scrap now transit through Thailand, Vietnam, Hong Kong or Japan to flow into China, adding US$ 100 per tonne extra cost, SMM learned.

In the meantime, a total of 8,776 tonnes of aluminium scrap received the green light in the 16 batches of approval for restricted solid scrap imports so far this year, however, 99.2 per cent down from the volume approved in a total of 11 batches last year.

Some secondary aluminium producers have completely stopped using aluminium scrap. Moreover, the approval process for a new scrap exporter by the Chinese government has become longer because of quality supervision and inspection.