Guangdong port congestion delays scrap metal shipment

A surge in scrap metal shipments into Sanshan port in southern China's Guangdong province in recent months has caused a bottleneck and disrupted deliveries as importers race to secure material before the start of new restrictions on 1 July.

"There is lots of congestion... customers said it will take one or two weeks more to import the containers," a source at one major European scrap supplier said.

Sanshan is the main entry point for scrap into Guangdong, a key manufacturing region for aluminium products.

China is the world's largest scrap buyer, importing 5.32mn t last year. Copper accounted for 45pc, or 2.41mn t, aluminium 1.57mn t and ferrous scrap 1.34mn t.

Under a new policy, all importers will need licences by 1 July to continue receiving scrap. Quarterly quotas from 1 July were also assigned by the environment ministry.

The third-quarter import quota for Ningbo and Shanghai was announced earlier in June, while the Guangdong quota is expected to be announced in the coming weeks.

Many buyers have rushed to beat the deadline.

According to customs data, aluminium scrap imports rose by 57.8pc on the year to 180,000t in May, but January-May receipts fell by 9.8pc to 660,000t.

Chinese consumers warned suppliers of looming congestion at Sanshan as early as May and instructed shippers to avoid having cargoes arrive between 20 June and 20 July, the source at the major European supplier said.

For example, if cargoes arrive on 20 June, it will take 10 days to clear the containers, which might just avoid the 1 July deadline.

Chinese buyers stipulated the date of 20 July "to make sure that they have some space to receive the quota.... it's less risky", the supplier said.

"We received the unofficial information at the end of May [regarding Sanshan congestion] and we prepared for it — we stopped importing since June," one consumer said.

But "if the containers arrive today, it is only possible to clear customs if you have good relations with the customs [authority]", the supplier added.

Given the logistical difficulty of redirecting or delaying all shipments to Sanshan to avoid them arriving between 20 June and 20 July, some cargoes will probably still arrive in this period.

As a result, there will be a demurrage and detention fee for containers held at the port because they lack custom clearance. The costs are estimated at over $100 per container per day.