Uncertainties over China¡¯s scrap import rules taking toll on country's secondary aluminium smelters: Source says

According to China Nonferrous Metal Industry Association, a large number of secondary aluminium smelters in China, especially those with limited feedstock options, are being affected by uncertainties over scrap import rules like the license awarding criteria, the volume each company will be allowed to import, and the duration of license validity.

July onwards China will restrict importing category six scrap or mixed metal containing non-metallic content. In the same month, Ministry of Environment and Ecology will issue import licenses and quota volume to secondary aluminium smelters, told an official of China Nonferrous Metal Industry Association to S&P Global Platts.

Per the report, some Chinese smelters have already suspended import while some stepped up purchases ahead of July. One Chinese secondary aluminium smelter source said that his company has already suspended spot imports this month because deals in May are for cargoes to arrive in July and that is when restrictions will come into effect. His company also planned to apply for a scrap import license, but there was no guarantee how much it would be able to import, he added.

According to market sources, possible import quota for the second half of 2019 is likely to be less than 0.8 million tonnes in total.

"Some are buying, some are not buying, everyone has a different story," said one US scrap trader. He said his customers in China are building up stocks since there is no guarantee how much it would be allowed to import.

Some Chinese secondary aluminium smelters running short of scrap feedstocks have even suspended spot export offers of aluminium alloy products, said one Japanese trader. There are typically 10-15 Chinese companies that offer spot ADC12 alloys to Japanese buyers daily.

Some regular suppliers in China, on the other hand, are continuing normal operations despite the looming scrap supply shortage, said another Japanese trader.

They said two scenarios are possible over the long term beyond 2020 -- China banning scrap imports of all types or China relaxing the restrictions gradually.

But one trader thinks that China can never stop buying scrap. In the past also, they had made different ways to import scrap.

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