Scrap exporters fear China's recategorization of high-grade copper, brass and aluminum scrap metal, set to begin on 1 July, will likely be postponed as the government has yet to release key details on the new policy.
The reclassification of nonferrous (NF) scrap was initially planned to be implemented in the next three weeks, but multiple sources told Argus that delays to the roll out are likely. One source familiar with the situation expects the implementation to be delayed until 1 September.
The government has not yet issued key information to the industry regarding specifics on HS codes for scrap metal shipments under the new system.
Market participants largely believe that China Customs will require new HS codes for shipments as the old codes were designated for specific scrap metal grades, while under the new system they will be classified as a raw material.
"The fact is there is nothing published yet and we don't know why they are holding it up," one US exporter said. "The scrap names have been reclassified but no one has the general customs codes."
For now, sources said the process of importing scrap into China is unchanged because without the new customs codes for scrap shipments Chinese importers will still need to meet proper certification and scrap quotas.
If the system is not launched by 1 July and is delayed by weeks or months the government will likely issue more quotas to maintain the flow of scrap metal imports into the country, sources said.
For now, the recategorization policy is the only way to circumvent China's plan to ban scrap imports by 2020.
Complexities with implementing the new rules have created difficulties with rolling out the program multiple times over the last year.
Zorba requirements loosened
Aluminum shredded scrap zorba will no longer be required to abide by strict packaging standards under the new policies.
"Super sacks are no longer required," a US exporter said. "This saves us a lot of trouble."
Zorba was initially expected to be packaged in super sacks, on skids or in gaylord boxes to meet the new standards.
Market participants said that upon further review it was found that that super sacks or stricter packaging posed inefficiencies and inspection challenges.
Additionally, the proposed packaging requirements would have added costs onto each container of zorba, for material expenses for the bags and additional labor cost with loading each super sack. Ultimately, these would have likely been passed down to Chinese consumers, according to US suppliers and scrap processors.
The new standards set purity levels of 98pc for aluminum cast scrap with a 0.7pc allowance for metallic impurity, while for zorba (shredded aluminum scrap) the minimum aluminum purity will be 91pc, with a total metallic content of minimum 99.1pc.
Argus assessed China prices for zorba (99pc metal minimum metallic content) at 42-45¢/lb on 5 June.
In Europe, some aluminium scrap suppliers see the reclassification of scrap metal in China as raw material as leading to a much-needed source of demand at a time when manufacturing markets in Europe providing little of their own, particularly the automotive market which normally accounts for much of the local demand for aluminium alloy units.
"China as an export market will become more difficult [under the new rules], but scrap suppliers have to do something and fulfilling the Chinese requirements may be it," a European scrap merchant said.
The standards group recyclable copper into seven categories, with imports required to meet copper content levels of 96.0-99.9pc, depending on product.
