NEW YORK U.S. scrap metal exporters are increasingly concerned about Chinas stepped-up supervision of scrap shipments to the country. While many believe that the program, commonly referred to as "Operation Green Fence," is a temporary initiative, others believe that the country will continue to strengthen its environmental regulations.
"China has a duty and a sovereign right to protect its environment and its citizens from hazardous materials," Robert Stein, president of the Bureau of International Recyclings nonferrous division and senior vice president of nonferrous marketing at St. Louis-based Alter Trading Corp., said during a speech at the Institute of Scrap Recycling Industries annual convention and exposition in Orlando, Fla. "These regulations come at a cost to shippers, and it adds a level of administrative oversight and burden that can, for a number of reasons, be problematic to the efficient movement of our scrap."
The current restrictions date back to a 2006 report by Chinas Ministry of Environmental Protection listing banned items found in nonferrous scrap imports (amm.com, March 13). According to several market participants, Chinese customs officials had loosely enforced the restrictions until a few weeks ago.
"We are getting e-mails every day from our importers talking about whats allowable and whats not," one exporter told AMM. "With Green Fence being enforced, the list of acceptable materials is constantly changing."
Many exporters at the ISRI convention posited that the crackdown on scrap shipments could be tied to a perceived slowdown in the Chinese economy and an increased awareness by government officials of Chinas growing environmental problems.
"The boom is over," a second exporter told AMM. "China has reached a critical threshold, and we are all going to have to figure out where the next major export market will be."
Others countered that Green Fence is a politically motivated initiative that will be relaxed once the leadership transition in China is complete.
"The environmental situation has become very serious in the mind of the Chinese public and politically important," Adam Minter, a Shanghai-based correspondent for Bloomberg World View, told conference attendees. "When we talk about Green Fence ... you have to keep in mind that there is genuine political pressure that actually is calling into question the legitimacy of the Chinese government as it now stands."
Minter said that a lack of cohesion within the Chinese government is creating uncertainty for midlevel officials. "There are all kinds of new government officials who dont know who they are answering to, and they all want to impress the new administration," he said. "Sooner or later, someone is going to read them the riot act and say, We actually need this metal and we need to start letting this stuff in again."
Despite the stepped-up supervision, officials from the China Certification and Inspection Group (CCIC) have remained relatively tight-lipped about the details of Operation Green Fence. "We did not receive any regulation change notice from China ... in the past few months," Sarah Peng, general business affairs manager at West Covina, Calif.-based CCIC North America Inc., told AMM in an e-mail. "We are doing preshipment inspection for scrap materials according to the China inspection standard GB16487-2005 as usual."