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China finally frees up nonferrous scrap imports

China has relaxed restrictions that for years have blocked nonferrous scrap from entering the country except under strict conditions. Beginning November 1 2020, metal scrap such as copper, aluminum and brass can be freely imported, according to an October 19 announcement from the Ministry of Ecology and Environment (MEE).

The MEE’s announcement brings more clarity to a process begun last January when China’s State Administration for Market Regulation published new standards for scrap metal taking effect from July 1 which focussed on the import of higher metal-content scrap, such as 99.9% for copper wire and 98% for aluminium castings scrap, Mysteel Global understands.

To differentiate the qualifying nonferrous scrap materials from other grades, China has assigned HS codes 7404000020, 7404000030 and 7602000020 for copper, brass and aluminum scrap respectively, according to the MEE announcement.

The announcement has great significance for the import of all steel and metal scrap into China, Mysteel Global notes. The stumbling block had been Beijing’s 2017 decision to ban the import of 24 kinds of waste from abroad and to strive for “zero solid waste import” by the end of 2020. As metal scrap had been defined as ‘waste’, so scrap imports were also covered by the ban.

However, after concerted lobbying by both the nonferrous and ferrous scrap industries of the related governing bodies, Beijing reclassified certain types of scrap as ‘recycling materials’, enabling them to be freely imported.

The 2017 directive did not result in foreign scrap being completely banned, though. Some imports have been allowed under an auction and quota scheme organized by state-backed China Solid Waste and Chemicals Management, but while the volumes allowable have varied considerably month to month, the totals have remained far smaller than pre-2017 levels, Mysteel Global notes.

For example, on the same day as the MEE’s announcement, China Waste Management issued its latest quota allocation – the thirteenth so far this year – allowing selected scrap traders and processing firms to import 5,980, 340 and 1,340 tonnes of copper, aluminum and steel scrap respectively within the remainder of this year.

The grades of import scrap approved by China Waste Management differ from those covered by the MEE’s announcement, Mysteel understands, and further quotas are likely to be awarded in the next two months. Those scrap processors who have outstanding import quotas from previous auctions they have yet to fulfil will be allowed to import their scrap after November 1, even though the quality may fail to meet the new standards. However, the quota scheme is likely to be discontinued from 2021.

A market source in East China’s Zhejiang province believed the new standards will bring some optimism to the scrap market. “The new criteria’s requirements for copper content are as the market had expected, and 90% of the copper scrap China is importing now already satisfies that criteria,” he told Mysteel Global.

“In theory, the implementation of the new standard will remove the restrictions on scrap imports and ease the shortage in the domestic market. Moreover, China’s copper scrap market will be determined by supply and demand, rather than policy factors,” he added, referring to the prevailing quota system.

On the other hand, the lifting of import restrictions on nonferrous scrap also brought a glimmer of hope for those in China’s market for ferrous scrap. “It is a good sign for the whole industry. Though it remains unclear when steel scrap will be allowed to be freely imported, I hope it will help to speed up the related decisions,” a Shanghai-based market source told Mysteel Global.

“This announcement indicates that the central government is paying attention to the classification and import of scrap, and is making efforts to detail rationalize its management,” she commented, adding that one of the biggest obstacles to removing the barriers to steel scrap imports is the lack of commonly-recognized industry quality guidelines.

However, a meeting was held earlier this month by industry body, the China Association of Metalscrap Utilization, and governing agencies such as MEE and the Ministry of Industry and Information Technology where discussions were held on new standards for recycled steel, as reported. The guidelines for steel scrap standards nationwide could be released by the end of 2020, and once these are published, the possibility of China allowing steel scrap imports will likely follow quickly, Mysteel Global understands.

Written by Lindsey Liu, liulingxian@mysteel.com and Anna Wu, wub@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com