<article><p class="lead">Non-ferrous scrap exporters are cautious about selling into China following the country's introduction of a new classification system. But the import process is said to be improving, a Bureau of International Recycling (BIR) panel said in a virtual conference on 14 January.</p><p>Shipments of non-ferrous scrap to China began arriving 4-6 weeks ago, with material being examined strictly to the letter of the new specifications, the panel heard. This follows China's resumption of aluminium, brass and copper scrap under new standards <a href="https://direct.argusmedia.com/newsandanalysis/article/2151689">from the beginning of November</a>.</p><p>Customs' inspections were supposed to be conducted randomly, the panel heard, but instead they are understood to be getting carried out on 100pc of inbound shipments as customs and market participants "feel each other out".</p><p>"Customs are also trying to figure out the best way to protect the Chinese environment under the rules that have been laid out by the Chinese government while also working with importers, large companies and factories that rely on the raw material," Mark Sellier of Global Metals Network said. "Customs are not used to doing this. They are learning as well."</p><p>Plastic, paint and enamelled copper wire of above 5pc are said to be some of the key irregularities that customs officers look for, with any red flags said to lead to an up-to-four-week inspection process or a rejection.</p><p>Inspections conducted before shipment provide exporters no advantage, as material still gets checked on arrival. Packaged material has the best chance of passing, Sellier said.</p><p>Global exporters are taking a cautious approach towards shipping material to China under the new regulations but as key details are ironed out, more material is expected to be sent to the country.</p><p>Issues will remain in the short to medium term, but participants will find a solution because the Chinese market is important to global exporters, and global scrap is important to Chinese buyers, Murat Bayram of global metal recycling company EMR said.</p><p>"China is interested in our recycling materials as much as we are interested in their capacities, because every tonne of scrap means less CO2," Bayram said.</p><p>"They also know they need our scrap and we know we need their capacities. They were coming to our house and we told them our sales price and conditions. At the moment, we are guests in their house and we have to listen very carefully to what they are expecting, because they are changing."</p><p>Uncertainty remains over the potential fines that could be incurred for breaching new standards. Michael Lion, BIR's international trade council chair, suggested fines of up to 5mn yuan could be levied for breaching the specifications, although Sellier said penalties are likely to be imposed only on "wilful acts to defraud the system", with slight quality issues likely to be simply returned to the sender. No fines are heard to have been imposed yet.</p><h3>Ferrous and freight</h3><p class="lead">The panel said global container booking availability has eased slightly from the tightness at the end of last year, but it remains difficult, while freight rates have significantly increased.</p><p>"Most scrap consumers ask you to ship with 14 days' free time. They want that free time paid for in your freight rate. The shipping companies tell us frequently that they will give you only seven days," Sellier said.</p><p>The slowdown of imports into China, resulting from the new standards, is exacerbating matters, as it takes longer for material to get from port to factory, which means there is less free time.</p><p>"This is only going to drive up the price of raw material to the buyer and impact the consumer eventually," he said.</p><p>The current container and freight issues affect all sizes of businesses and need to be calculated within suppliers' margins, especially if freight rates continue to rise, Bayram said.</p><p>Supply factors and shipping issues present in the non-ferrous market also exist in the ferrous market and are helping to support prices, the panel said.</p><p>China's new ferrous classification may present issues of interpretation similar to those seen in the non-ferrous market, the panel said.</p></article>
