China scrap import confusion sparks increased buying

A lack of government information on the mandatory online registration and new licences for scrap metal importers in China has sparked increased buying of non-ferrous scrap ahead of a 1 July deadline.

The Chinese government requires all ferrous and non-ferrous scrap buyers in China to register online and acquire import licences before 1 July for future imports.

Since the announcement in January regarding the new requirement, there has been no official instruction or guidance from the central authority regarding the online registration and licence application. This has led to confusion in the market over the process and policy.

"[The buyers] are made to register themselves on the online system. They have no written confirmation and have no access to the system. Every buyer in China is waiting for this, they are waiting for a clear guidance. The closer to 1 July, the more scared buyers are," a trader said.

A Chinese market participant said it is unclear which department is responsible for the issuing of import licences and whether there will be a quota assigned to buyers.

Another trader said that his customers have had positive interaction with Chinese customs and are optimistic about receiving the scrap import licence.

Despite this, many buyers are stocking up ahead of the 1 July deadline in case of any disruption caused by the new licences and online registration. The freight deadline is in June for any China-bound scrap cargo arriving in July.

"The customers bought more than they need, they don't have this clear indication from the government yet," the first trader said.

Increased Chinese buying has pushed US zorba prices higher. Argus assessed prices for 95/2 quality zorba, delivered US secondary or media plant, at 44-46¢/lb on 29 March, up from 42.5-45.5¢/lb a week earlier.

Chinese copper scrap inventories remain high and the last deal heard for birch cliff to China was concluded at 88.5-89pc of the LME copper contract.

China is one of the biggest copper and aluminium scrap importers in the world but imports fell after the implementation of an impurity threshold of 1pc for non-ferrous scrap from 1 March 2018.

Chinese copper scrap imports in 2018 fell to 2.41mn t, down by 6.3pc from 2017, while aluminium scrap imports in 2018 dropped by 26.7pc on the year to 1.57mn t.