Ban on Scrap Metal Likley to Boost Chinese Refined Copper Imports

BEIJING (Scrap Monster):  The proposed plan of action by Chinese administration to ban additional categories of scrap metals by end-2018 has raised concerns from several corners. Meantime, the proposed ban on scrap materials including copper scrap is set to significantly boost the volume of inward shipment of refined copper into China- the world’s largest consumer of the metal. The ban action is considered to be part of Chinese efforts to curtail imports of contaminated scrap into the country.

In reaction to the ban news, copper prices surged higher on Index. The London copper prices hit the highest level in two years on Wednesday, rising by nearly 3% to $6,400 per tonne. Incidenatlly, copper prices have surged higher by almost 14% since the beginning of this year. The December copper futures on the New York Comex market hit fresh highs. The Copper Futures on Chinese Shanghai Futures Exchange too inched higher to hit the highest level in past five months, rallying by almost 5% to $7,406 per tonne.

According to China Non Ferrous Metals Industry Association (CNIA), the Chinese administration is likely to impose restrictions on imports of scrap metal including wire, motors and bulk scrap metal. CNIA had earlier confirmed that it has already been notified of the ban. The ban is likely to block a lot of copper supply into China. A ban on scrap could result in increased imports of refined copper. Incidentally, China is the world’s largest consumer and producer of refine copper, constituting approximately 45% of global demand.

Off late, the country has been importing higher quantities of raw materials and lower quantities of refined metal. The latest trade figures indicate that refined copper imports by the country declined almost half-a-million tonne to total 1.83 million tonnes in July this year. The country has imported less refined copper this year. Meantime, imports of copper concentrates were up by 3.5% during the month. As expected, the supply gap was filled by increased scrap supply. The Chinese copper scrap imports reported 16% jump to total 2.1 million tonnes in July this year.

In the long run, the proposed ban on wire, motors and bulk scrap metal could lead to relocation of some highly polluting dismantling businesses to be relocated to Southeast Asian countries. The Chinese copper scrap market is expected to witness sharp rebound after relocation of these dismantlers. The proposed ban by the authorities is not expected to impact China’s copper supply, analysts noted.