Fresh Scrap Metal Import Restrictions to Impact Global Scrap Trade Flows

The uncertainties surrounding new restrictions by Chinese administration on scrap metal imports into the country is likely to impact overall scrap trade, said sources. Incidentally, the new restrictions will take effect in July this year, according to Chinese Ministry officials.

The new restrictions are considered to be an extension to the earlier ban placed on Category 7 scrap. Starting July 1st, the restrictions will be applicable to imports of eight different scrap metal categories, including aluminum, steel and copper. Until now, these materials were under the “unrestricted” classification.

According to sources, the restrictions will now cover high-grade Category 6 copper scrap and aluminum and steel scrap. As per Ministry directives, scrap metal importers will have to demonstrate their capability to convert the imported scrap into refined metal or semi-finished products, in order to receive import licenses and quotas from the Ministry of Ecology and Environment.

It is anticipated that Category 6 restrictions are likely to lead to increased disruptions in trade flows, especially due to lack of clarity on quota systems. The environmental restrictions had reduced the Chinese scrap metal imports by almost one-third year-on-year to total 5.34 million tonnes in 2018. The new restrictions may lead to further contraction in scrap metal imports by the country during the current year.