The Chinese government has started inspections ahead of issuing ferrous and non-ferrous metal scrap import licenses for the second half of 2019 to avoid a potential month-long disruption of all scrap imports.
The environmental ministry aims to issue the first batch of licenses in late June - right before the launch of a new quota system to restrict the inflow of scrap metal, MEE spokesperson Liu Youbin said at a press conference.
Starting July 1, the import of eight types of scrap metal - including No1 and No2 copper scrap, several types of aluminium scrap and steel scrap - will be restricted by quantity and on a quota basis. The MEE will have to decide who will be allowed to buy scrap metal after July.
Liu said the department carried out inspections at various copper scrap, aluminium and steel scrap processing facilities from May 15-24. Facilities that failed to comply with emissions requirements will be fined and their applications for import quotas rejected.
Scrap metal importers in China started to apply for import quotas in mid-May after the government rejected applications submitted too soon earlier in the year. But the examination of importers’ eligibility - including their scrap-processing facilities and emissions standards – had been scheduled to start in July.
This sparked fears in the industry that the inflow of scrap metal would be halted for up to a month in July. This is because Chinese consumers would have to cease imports no later than June 15 to allow them to clear material through customs before the July 1 implementation date and resume shipments after July 15.
Major refineries and fabricators were reported to have postponed their purchases and shipments of scrap over the past two months to avoid any difficulties getting newly purchased scrap cleared by the end of June.
In April, the No2 birch/cliff scrap discount to the outright exchange copper price reached 37-42 cents per lb, the widest since the price launched three years ago, due to reduced scrap buying. It subsequently narrowed to 34-38 cents per lb in May due to a softer copper price.
China imported 2.6 million tonnes of copper scrap last year.
The latest industry attempt to protect copper resources contained in scrap from a potential outright ban on scrap imports by 2021 is a proposal to rename copper scrap as “recyclable copper raw materials.” This is under examination by various Chinese government departments, sources told Fastmarkets earlier this week.