China issues 12th scrap metal import quota tranche

China issued a 12th tranche of scrap metal import quotas for 2020 on Thursday as it continued to delay clarification of its new scrap import policy, to the consternation of international recycling markets.

The additional quotas approved by China's Solid Waste and Chemicals Management Bureau — a unit of the country's ecology and environment ministry — added 136,335t of copper scrap and 121,285t of aluminium scrap to the yearly allowance, as well as 2,610t of ferrous scrap.

The overall scrap metal import quota for the year now stands at 1.72mn t — comprising 879,475t of copper scrap, 818,664t of aluminium scrap and 23,110t of ferrous scrap.

The new addition is the largest tranche of scrap metal import allowances since the ninth tranche issued in early July, following the initial delay of China's new import specifications from their previously planned launch date at the start of that month.

China has approved the recategorisation of high-grade copper, brass and aluminium scrap as raw material with no import restrictions, but until it clarifies what specifications scrap grades must fall under to qualify as unrestricted raw material imports their delivery to China can only fall under the current quota system.

The delay prompted US industry association the Institute of Scrap Recycling Industries to call out China's alleged lack of transparency and receptiveness to dialogue on its scrap metal import policy in comments to the US Trade Representative (USTR) this week.

The Washington-based group highlighted its concerns in a letter yesterday to the trade policy staff committee for the USTR, which publishes an annual report on China's compliance with its World Trade Organisation commitments.

European markets are also heavily affected by the delay, although the impact differs depending on the type of metal and each participants' position in the market. Copper scrap sellers, for example, are hoping that the new specifications are announced soon so that large volume exports to China can resume. But aluminium alloy producers hope the delay continues as China has been buying far more of their product while aluminium scrap imports have been capped by the quotas, and a resolution would likely see a twofold attack on their margins as raw material markets tighten and Chinese alloy demand falls away.

Although there is no indication yet on when an announcement might eventually come regarding the new scrap import policy, none of the quota tranches issued so far this year allow for any material to be delivered to China beyond the end of 2020.

By Jethro Wookey