Chiao: China's non-ferrous recyclers forced to turn to 'unclassified scrap'

Global: Although China has finally issued its long-awaited import licences for Category 7 mixed metal scrap, these have gone ‘only to a restricted number of applicants within a limited area of China, and with quantities sharply reduced compared to those approved for 2017’, laments David Chiao, president of the BIR world recycling organisation’s non-ferrous metals division in the body’s latest Mirror market report.

In the first batch of import licences issued by the Ministry of Environmental Protection on December 26, seven enterprises were approved for a total of 188 601 tons of mixed metals; and in the second batch three days later, the quantity was 172 872 tons of mixed metals across 26 enterprises.

Copper scrap import licences have tumbled more than 94% year on year. ‘Chinese recyclers who used to rely on imported scrap have been forced to turn to lower domestic grades and to unclassified scrap to make up the shortfall required for economic production,’ Chiao observes.

Other South East Asian countries are looking to fill at least some of the demand gap left by China, he adds.

Ma Hongchang, BIR’s advisor on regulatory and policy developments in China, draws attention to several other key developments, including: that CCIC no longer has exclusivity regarding pre-shipment inspections, with AQSIQ now accepting new applications to become a pre-shipment inspection company; and that the AQSIQ licence validity period has been extended from three years to five years.

There are already reports from China that, owing to environmental protection measures and policy changes affecting imported materials, secondary aluminium smelters ‘are finding difficulty in restocking’, with this situation ‘expected to tighten in 2018’.

In the Middle East, meanwhile, a new VAT system came into effect in the Gulf Cooperation Council region on January 1 and markets have needed time to adapt, thus slowing commercial activities and trade.

Non-ferrous traders and scrap yards will be affected ‘as traditional ways of local procurement and sales will have to change’, it is reported in the Mirror.

In Russia too, VAT has been re-applied to companies operating with non-ferrous metals, effective the start of 2018. This change, coming after eight years of no VAT on scrap, is said to be having ‘a serious dampening effect on non-ferrous prices’.

This article is based on the latest Non-Ferrous Metals World Mirror produced by the BIR world recycling organisation for the benefit of its members.

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