China’s desire to overhaul its import categories for scrap and waste products undoubtedly will be the biggest issue to affect nonferrous scrap trade flows and price levels over the next several years. Nevertheless, this critical topic has been clouded by rumor, gossip, unclear translations and indeterminate timelines. And the uncertainty has made it increasingly difficult for businesses in the United States to plan for their future. What’s on the “forbidden list”? What items will be listed as “limited imports”? What does “limited imports” even mean? How will copper and aluminium scrap be categorized? When will the new rules be implemented? In this special edition, reporters from AMM and sister publication Metal Bulletin will cut through the fog and answer these questions – and many, many more. Nonferrous scrap market awaits China’s next move
Transcript
China’s desire to overhaul its import categories for scrap and waste products undoubtedly
will be the biggest issue to affect nonferrous scrap trade flows and price levels over the next
several years. Nevertheless, this critical topic has been clouded by rumor, gossip, unclear
translations and indeterminate timelines. And the uncertainty has made it increasingly difficult
for businesses in the United States to plan for their future. What’s on the “forbidden list”?
What items will be listed as “limited imports”? What does “limited imports” even mean? How
will copper and aluminium scrap be categorized? When will the new rules be implemented? In
this special edition, reporters from AMM and sister publication Metal Bulletin will cut through
the fog and answer these questions – and many, many more.
Nonferrousscrap market
awaits China’snext move
American Metal Market 2SEPTEMBER 2017
China’s Ministry of Environmental Protection released its draft of changes to some technical standards for imported scrap, calling for stricter regulations for impurities as well as new weight requirements for metal and electrical appliances.
The changes include reducing the “carried waste” threshold to 0.3% for all commodities imported into the country, a drastic requirement that ISRI said cannot be met—and could have dire consequences on the industry.
“The application of this standard will effectively result in a ban on the
importation of all these commodities. It is simply not possible to achieve such a control level, nor is it possible to even measure it with such accuracy,” ISRI president Robin Wiener said in a letter addressed to the Department of Soil Environment Management and the Ministry of Environmental Protection.
This is the Washington-based trade organization’s third public letter addressing the new policies this month.
The current standards followed by the global recycling industry vary by commodity and were determined through an open and deliberative
process to reflect manufacturing standards and needs, according Wiener.
Market sources told AMM that the impurity tolerance for Category 7 imports was previously 2% and that the new standard is so tight that even some Category 6 items could be on the chopping block if it is not loosened.
Another change affects the weight requirement for metal and electrical appliance scrap items, setting the minimum recyclable-metal content at no less than 80% of the total weight of the material.
“In the United States, a 50% threshold is used when defining what is considered legitimate scrap metal for recycling. For consistency in the global trade, we would respectfully request that a uniform standard of 50% be used within China as well,” Wiener said.
AMM understands that the policy is still under discussion, with some scrap players meeting in China’s Jiangxi province to discuss it in greater detail this Saturday, September 2.
Kiki Kang, Shanghai, contributed to this report.
BRAD MACAULAY
China’s proposed standards ‘not possible’: ISRI
Newly proposed standards by China’s government could effectively prohibit scrap imports into the country if implemented, according the Institute of Scrap Recycling Industries (ISRI).
American Metal Market 3SEPTEMBER 2017
“ISRI respectfully requests the Chinese government use more specific terminology in reference to recyclable materials in order to properly distinguish between high-value scrap commodities and waste,” ISRI president Robin Wiener said in a letter addressed to the World Trade Organization (WTO) and the Standardization Administration of China (SAC), noting that ISRI supports a ban on unusable waste that does not meet certain specifications.
Honing in on the proper terminology for describing these separate materials is key to providing direction and clarity to the global recycling industry, and could serve as a foundation as the government updates other laws regarding imports.
The Washington-based trade association recognized the challenges China faces in its efforts to stop some exporters using it as a dumping ground, a threat that non-specific regulatory language could enable.
“ISRI fully supports the efforts of the Chinese government to protect the health and welfare of its citizens and the environment. … ISRI offers suggestions on improving the language in the draft standard to help properly identify scrap materials that are valuable commodities used as raw materials as distinct from waste that has no value or use,” Wiener wrote.
Those comments directly refer to
China’s July 18 notification to the WTO of its intent to revise general rules and identification standards for solid waste, set to become effective September 1, and marks the trade organization’s second public letter to the WTO addressing the new policies.
Up to this point, notifications released by the Chinese government have used terms such as “solid waste” inclusively to define both waste and scrap, creating confusion for participants in the US and global industry.
“Simply put, scrap is not waste. Waste … is a material that has no value and is not wanted. Wastes are disposed of because they are no longer useful. In contrast, scrap … is a valuable commodity sold in the global marketplace according to industry-wide, globally recognized specifications as a raw material in lieu of virgin materials for manufacturing,” Wiener said, noting that more than 800 million tonnes of scrap commodities are consumed worldwide each year.
In her letter, Wiener stressed the importance of the global scrap trade and access to global markets, calling attention to the $86.5-billion dollar global industry and the US’s role in the market, which she valued at $17.5 billion.
BRAD MACAULAY
Semantics crucial in China’s scrap ban: ISRI
The Chinese government needs to recognize the difference between waste items and valuable scrap commodities when revising new standards for imported materials, according to the Institute of Scrap Recycling Industries (ISRI).
“ISRI respectfully requests the Chinese government use more specific terminology in reference to recyclable materials in order to properly distinguish between high-value scrap commodities and waste.” ISRI president Robin Wiener, in a letter addressed to the World Trade Organization (WTO) and the Standardization Administration of China (SAC)
American Metal Market 4SEPTEMBER 2017
“ISRI fully supports the efforts of the Chinese Government to improve environmental protection and standards within its domestic recycling infrastructure. However, we disagree that a ban on the import of specification-grade scrap materials will help with those efforts,” ISRI president Robin K. Wiener said in a letter addressed to the WTO and China’s Ministry of Environmental Protection (MEP).
Specifically, ISRI is calling on the WTO to issue revisions and clarifications on China’s intent to ban certain scrap imports as it steps up its environmental policies.
The comments come on the heels of the MEP’s July 18 notification to the WTO of its intent to update its “forbidden” scrap import list by September 1, 2017, as well as a government statement on July 27 of its intent to gradually halt imports of certain scrap items, by the end of 2019, that can be replaced by China’s domestic resources.
“What is very much needed in the short term is clarity on what materials are specifically intended by the Chinese to be included in any ban,” Wiener said.
Items included within the scope of “solid waste” are wide ranging and include certain metals, as well as recovered paper and plastics produced to specification-grade commodities within the United States.
BAN COULD BRING DIRE CONSEQUENCES
The US alone could see the loss of “tens of thousands of jobs and the closure of many recycling businesses,” Wiener said, noting that the trade of these specification-grade commodities is crucial for the industry.
“With more than $5.2 billion in scrap commodities exported from the United States to China last year alone, the trade in specification-grade commodities between the United States and China is of critical importance to the health and success of the US-based recycling industry and China’s manufacturing sector,” Wiener said.
The Washington-based trade organization is also seeking clarification on the timetable for the policy’s implementation. ISRI is under the impression that no shipments that leave the United States after September 1 will be allowed into China, even if they arrive in the country before December 31.
“If true, this creates a significant challenge to our industry as suppliers and to the Chinese manufacturing sector as consumers. We strongly request the Government of China consider a longer transition time to allow customers and suppliers to adapt to a policy that will have such a significant impact on commodity markets,” Wiener said.
ISRI also struck back at the Chinese
government for its unwillingness to provide greater details or information about the impending policy changes.
“This lack of transparency on the part of the Chinese Government has fueled increased speculation in the commodities markets and panic in the segment of the recycling industry specializing in the commodity streams of concern,” Wiener said.
Meanwhile, the MEP announced August 17 that it had adjusted its import categories for scrap and waste products, with eligibility requirements for Category 7 copper and aluminium scrap materials expected to be tightened in the coming weeks.
The MEP documents detailed three “lists”—“forbidden,” “limited imports” and “permissible,” but the market continues to seek clarity on the adjustment.
AMM and sister publication Metal Bulletin have learned that details of the requirements were to be discussed at a meeting on August 22.
At the same time, a consultation notice seen by AMM and Metal Bulletin was sent by the MEP to a wider range of market participants to collect feedback on updating and amending import requirements. The notice lists August 25 as the deadline for feedback.
BRAD MACAULAY
China’s scrap ban could cost US jobs: ISRI
The global scrap industry could be severely damaged if scrap imports into China are drastically reduced or prohibited via a proposed ban, the Institute of Scrap Recycling Industries (ISRI) said in a letter addressed to the World Trade Organization (WTO).
American Metal Market 5SEPTEMBER 2017
The Chinese government on August 16 released revisions to its Catalogues of Restricted Waste Imports. Materials have been listed in three categories: prohibited from importation, restricted importation and automatic licensing for importation. The revisions will become effective December 31, 2017.
China’s new scrap bins
CATALOG OF SOLID WASTE THAT CAN BE USED AS RAW MATERIALS UNDER IMPORT RESTRICTIONS
Serial No.
The Customs commodity code Name of waste Name on license
Applicable environ-mental protection and control standard Other requirements or notes
I. Metal-containing waste from the melting and refining of metal
1 2618001001
Granulated slag (including slag sand) produced by smelting the iron and steel that mainly contains manganese, with the content of manganese > 25%
Granulated slag produced by smelting the iron and steel that contains manganese > 25%
GB 16487.2 Mn>25%
2 2619000010 Mill scale from steel rolling Mill scale from steel rolling GB 16487.2 Fe>68%, CaO and SiO2 total <3%
3 2619000030 Slag and dross containing more than 80% of iron, from the smelting of iron or steel
Slag and dross containing more than 80% of iron, from the smelting of iron or steel
GB 16487.2
Refers to the waste iron and steel con-taining a small amount of metallurgical slag after cooling, breaking and magnetic selection from the slag of iron and steel smelting, with iron content> 80% and S and P total <0.7%, to be used as raw material for iron and steel smelting
IV. Metal scrap, including alloys (metallic and not in a loose form; not being in a loose form means not being in the form of powder, sludge, dust or solid waste that contains hazardous liquid)
15 7204210000 Waste and scrap of stainless steel Waste and scrap of stainless steel GB 16487.6
16 8101970000 Waste and scrap of Tungsten Waste and scrap of Tungsten GB 16487.7
17 8104200000 Waste and scrap of Magnesium Waste and scrap of Magnesium GB 16487.7
18 8106001092 Other waste and scrap of unrolled Bismuth Waste and scrap of Bismuth GB 16487.7
19 8108300000 Waste and scrap of Titanium Waste and scrap of Titanium GB 16487.7
20 8109300000 Waste and scrap of zirconium Waste and scrap of zirconium GB 16487.7
21 8112921010 Unrolled germanium waste and scrap Germanium waste and scraps GB 16487.7
22 8112922010 Unrolled vanadium waste and scrap Vanadium waste and scrap GB 16487.7
23 8112924010 Unrolled niobium waste and scrap Niobium waste and scrap GB 16487.7
24 8112929011 Unrolled hafnium waste and scrap Hafnium waste and scrap GB 16487.7
25 8112929091 Unrolled gallium, rhenium waste and scraps Gallium, rhenium waste and scraps GB 16487.7
26 8113001010 Waste and scrap granular or powdered tungsten carbide
Waste and scrap granular or powdered tungsten carbide GB 16487.7
27 8113009010 Other waste and scrap of tungsten carbide, other than granules or powder
Other waste and scrap of tungsten carbide, other than granules or powder
GB 16487.7
28 7204490010 Waste compressed auto body Waste compressed auto body GB 16487.13
29 7204490020 Metal and electrical appliance scraps mainly for recycling iron and steel
Metal and electrical appliance scraps mainly for recycling iron and steel
GB 16487.10
30 7404000010
Waste electric motors etc. mainly for recycling Copper (including waste electric motors, wires, cables and metal and electrical appliance scraps)
Waste electric motors etc. mainly for recycling Copper
GB 16487.8 GB 16487.9 GB 16487.10
31 7602000010
Waste wires etc. mainly for recycling Aluminum (including waste wires, ca-bles and metal and electrical appliance scraps)
Waste wires etc. mainly for recy-cling Aluminum
GB 16487.9 GB 16487.10
32 8908000000 Vessels and other floating structures for breaking up
Waste vessels, not including aircraft carrier GB 16487.11 Not including aircraft carrier
Source: China’s Catalogues of Restricted Waste Imports as translated by ISRI
American Metal Market 6SEPTEMBER 2017
CATALOG OF SOLID WASTE PROHIBITED FROM IMPORTATION
Serial No.
The Customs commodity code Name of waste Brief name
XI. Metal waste and waste containing metal
84 7112301000 Ashes containing silver or silver compound (used primarily for recovery of silver) Ashes containing silver or silver compound
85 7112309000 Ashes containing other precious metals or their compound (used primarily for recovery of precious metals) Ashes containing other precious metals or their compound
86 7112912000 Waste and scrap containing gold and gold compound (excluding those containing other precious metals, used primarily for recovery of gold) Waste and scrap containing gold and gold compound
87 7112991000 Waste and scrap containing silver and silver compound (excluding those containing other precious metals, used primarily for recovery of silver) Waste and scrap containing silver and silver compound
88 7112992000 Waste and scrap containing other precious metals or their compound (used primarily for recovery of precious metals) Waste and scrap containing other precious metals or their compound
90 7802000000 Lead waste and scrap Lead waste and scrap
91 8102970000 Molybdenum waste and scrap Molybdenum waste and scrap
92 8105300000 Cobalt mattes waste and scrap Cobalt mattes waste and scrap
93 8107300000 Cadmium waste and scrap Cadmium waste and scrap
94 8110200000 Antimony waste and scrap Antimony waste and scrap
95 8111001010 Manganese waste and scrap Manganese waste and scrap
96 8112130000 Beryllium waste and scrap Beryllium waste and scrap
97 8112220000 Chromium waste and scrap Chromium waste and scrap
98 8112520000 Thallium waste and scrap Thallium waste and scrap
99 8112923090 Unrolled indium waste and scrap Indium waste and scrap
XII. Waste batteries
100 8548100000 Waste and scrap of batteries and spent batteries [Meaning the waste and scrap of primary batteries (packs) and electric accumulators, spent primary batteries (packs) and electric accumulators]
Waste and scrap of cells, batteries and accumulators
CATALOG OF SOLID WASTE THAT CAN BE USED AS RAW MATERIAL UNDER AUTOMATIC IMPORT LICENSING Serial No.
The Customs commodity code Name of waste Name on license
Applicable environmental pro-tection and control standard
II. Metal scrap, including alloys 4 7112911010 Waste and scrap of gold Waste and scrap of gold GB 16487.7
5 7112911090 Waste and scrap of metal clad with gold (but excluding sweep-ings containing other precious metals)
Waste and scrap of metal clad with gold GB 16487.7
6 7112921000 Waste and scrap of platinum, including metal clad with platinum (but excluding sweepings containing other precious metals)
Waste and scrap of platinum, including metal clad with platinum
GB 16487.7
7 7204100000 Waste and scrap of cast iron Waste iron & steel GB 16487.6
8 7204290000 Other waste and scrap of alloy steel Waste iron & steel GB 16487.6
9 7204300000 Waste and scrap of tinned iron or steel Waste iron & steel GB 16487.6
10 7204410000 Waste iron and steel from mechanical processing (Turnings, shavings, chips, millings waste, sawdust, filings, trimmings and stampings)
Waste iron & steel GB 16487.6
11 7204490090 Unlisted ferrous waste and scrap Waste iron & steel GB 16487.6
13 7404000090 Other copper waste and scrap Copper waste and scrap GB 16487.7
14 7503000000 Nickel waste and scrap Nickel waste and scrap GB 16487.7
15 7602000090 Other aluminum waste and scrap Aluminum waste and scrap GB 16487.7
16 7902000000 Zinc waste and scrap Zinc waste and scrap GB 16487.7
17 8002000000 Tin waste and scrap Tin waste and scrap GB 16487.7
18 8103300000 Tantalum waste and scrap Tantalum waste and scrap GB 16487.7
Source: China’s Catalogues of Restricted Waste Imports as translated by ISRI
American Metal Market 7SEPTEMBER 2017
The MEP released documents detailing three lists on August 17, namely a “forbidden list.” “limited imports” and “permissible list,” AMM and sister publication Metal Bulletin have learned.
The import of scrap and waste products on the “forbidden list” will be banned, while items listed under “limited imports” will continue to be allowed if they meet certain requirements set by the authorities. Items on the “permissible list” can be imported into the country with no additional restrictions.
The adjustments set out in the documents will go into effect on December 31.
Scrap copper and aluminium in Category 7 remain on the list of “limited imports,” unchanged from official guidance issued at the end of 2015.
STRICTER REQUIREMENTS ANTICIPATED
In late July, rumors spread in the market that the import of Category 7 copper scrap would be banned as early as in 2019, lending support to copper prices.
Although there has been no change in copper and aluminium scrap categorization, requirements to qualify for the listing may become stricter, Metal Bulletin has learned from the market. Details of the requirements are
expected to be discussed at a meeting on August 22, a source familiar with the matter said.
“Current requirements for Category 7 scrap are actually quite basic, meaning most products are allowed to be imported directly,” the source said. “The discussion ... will take in the opinions of (25) major players on a new requirement, which could be stricter.”
The MEP earlier this month sent a separate consultation notice, seen by Metal Bulletin, to a wider range of market participants to collect feedback on updating and amending import requirements. The deadline for feedback is August 25.
Copper and aluminium scrap that fall into Category 7 are traded under HS codes 7404000010 and 7602000010, respectively.
The effect of a change in requirements is likely to be larger for copper scrap due to the higher volumes of imports into China relative to aluminium scrap.
China imported around 1.85 million tonnes of copper scrap in the first half of the year, up 18.66% year on year, customs data showed.
Scrap material that falls under Category 7 could account for nearly 80% of the total actual weight, although the average copper content
in those products is relatively low—an estimated 10% to 50%—compared with those in Category 6, one market observer told Metal Bulletin.
About 70% of the aluminium scrap imported into China is zorba, which is a Category 6 metal (HS code 7602000090).
OTHER METALS
A possible new scrap import regulation would have no impact on nickel, Metal Bulletin has learned.
The import of nickel waste and scrap under HS code 7503000000 would still be permitted, unchanged from the 2015 regulation.
According to Chinese customs data, China only imported 18 tonnes of nickel waste and scrap in the first six months of the year, tiny compared with China’s nickel consumption of around 1.13 million tonnes in 2016.
The import of zinc scrap under HS code 7902000000 and tin scrap under HS code 8002000000 would be unchanged from the 2015 regulation.
Lead scrap under HS code 7802000000 would remain on the “forbidden list.”
Brad MacAulay, Ellie Wang and Susan Zou contributed to this report.
BRAD MACAULAY
China adjusts scrap listings; mart seeks clarity
China’s Ministry of Environmental Protection (MEP) has adjusted its import categories for scrap and waste products, with eligibility requirements for Category 7 copper and aluminium scrap materials expected to be tightened in the coming weeks after the country continued to step up its environmental policies.
American Metal Market 8SEPTEMBER 2017
Overall exports of nonferrous scrap fell by 22,429 short tons since May, but rose 9,694 tons vs. June of last year.
Among the seven nonferrous scrap grades tracked by AMM—aluminum, aluminum used beverage cans (UBCs), copper, lead, lead-acid batteries, nickel and zinc—aluminum and copper scrap led the charge lower, while lead bucked the trend and inched marginally higher.
The moderate decline in nonferrous exports for the month bucked some expectations in the industry, which anticipated that the threat of import restrictions in China would send exports off a cliff. However, market sources noted that while the effects have yet to be fully realized from a volume standpoint, nonferrous scrap export prices have felt more of that impact—a fact that will eventually translate into lower shipments to the
scrap-consuming giant. In fact, uncertainty stemming
from China’s National Sword initiative has had a direct impact on mixed nonferrous metals prices in the US, according to the Bureau of International Recycling.
“Effects from National Sword will come. China has stopped importing some metals even though an announcement hasn’t been made. Duties have gone up so even in an up market, the price has come down,” one exporter source said, noting that as prices deteriorate, a drop in shipments will likely follow.
A second exporter shared a similar view, saying that up to this point, the most noticeable impact of the lingering threat has been on metal prices—not volumes.
“I haven’t felt really any effects from
National Sword yet with volumes, but it has impacted the markets from a pricing standpoint. There have been strong words, but so far it hasn’t materialized on the ground level,” he said.
As uncertainty overhangs the market, exporters are moving cautiously forward, keeping all eyes on China and its appetite for lower-grade nonferrous scrap items, which are the most vulnerable to demand changes.
Aluminum scrap exports saw the greatest decline; volumes dropped by 11,273 tons sequentially in June but were up 7,477 tons vs. the same month last year. China—including Hong Kong—accounted for the largest share of the drop, decreasing its consumption by 10,606 tons month on month. India, Canada, Germany, Mexico, Japan and Pakistan also recorded lower orders for the month.
Reductions in overall copper scrap shipments followed a similar trend during the month, falling by 7,073 tons compared with May. Although China’s drop in consumption was the main driver for the red metal’s decline, too, the overall reduction was shared almost across the board as key consuming countries logged weaker shipments month on month.
BRAD MACAULAY
US nonferrous scrap exports dip; eyes on China
US nonferrous scrap exports stepped lower in June, slipping by nearly 9% compared with the prior month, as uncertainty about China’s National Sword initiative continued to loom over the industry.
Total 227,344 249,773 231,680 1,398,001 1,256,465 +11.3
Source: Compiled by AMM from data released by the U.S. Commerce Department.
American Metal Market 9SEPTEMBER 2017
“China’s National Sword initiative has impacted the zorba and zurik markets. Certain qualities of zurik are now being held in inventory as producers look for alternative markets and new processing technology to make a better quality and to further separate its component metals,” Andy Wahl, vice president of the Brussels-based association’s nonferrous metals division, said in its World Mirror on Nonferrous Metals report.
All eyes have been on China as the nation takes steps to crack down on pollution related to the processing of imported scrap.
While there has been no public announcement by the Ministry of Environmental Protection regarding any specific bans on nonferrous items, concerns in the industry are mounting especially as the scrap-consuming giant has already had other recycled products like paper and plastics in its crosshairs.
China submitted a document to the World Trade Organization on July 18 informing it that the country would no longer take in any “foreign garbage,” such as slag from steelmaking and many kinds of waste wool, ash, cotton and yarn.
The China Nonferrous Industry Association also informed its members in late July that China would prohibit the import of scrap materials listed in the seventh category under customs HS code before the start of 2019.
Included in this category are scrap products that require further processing or dismantling and cannot be directly charged in a furnace, like wire, cables and other metals.
Lower qualities of insulated copper and aluminum wire products also might not pass any new standards expected to be applied to imported metal items, Wahl said.
Lingering uncertainty over the potential ban has the industry in limbo and some prices under pressure as more material is left in the US domestic market.
“The zorba market is wary of this initiative, although the general consensus among producers is that there should not be any issue for those producing high-grade zorba of 95/3 (95% metallic/3% red metal content) or better,” Wahl said.
The effects of increased zorba supplies has trickled down to twitch prices as well, which slid through July to reach a six-month low in the US.
“With fairly good zorba availability in the domestic market, twitch prices have dropped as supply and demand is helping secondary consumers increase their buying margins, although ingot sales are not lower but quantities are limited,” Wahl said.
However, the BIR is urging the industry to ignore rumors surrounding China’s import intentions until an official
announcement from is made. China’s Ministry of Environmental
Protection “has put on hold the scrap import permit renewal-extension approval procedure for mixed metal until July’s thorough environmental inspection program is completed across the country. I urge everyone not to repeat hearsay; let us wait for the official announcement,” David Chiao, president of the BIR’s nonferrous metals division, said in the report.
BRAD MACAULAY
National Sword hurting US scrap prices: BIR
Uncertainty stemming from China’s National Sword initiative is having a direct impact on mixed nonferrous metals trade in the United States, according to the Bureau of International Recycling (BIR).
American Metal Market 10SEPTEMBER 2017
The Washington-based trade group is taking a proactive role on the issue and aggressively working through various outreach channels with the United States and Chinese governments, as well as the European Union to stay on top of the matter for the recycling industry, ISRI said during a conference call on June 13.
“Nothing is definitive right now, but as long as it is quality scrap you can ship with confidence. Any announcement that will come should not take effect until at least the first of the year,” ISRI president Robin K. Wiener told AMM following the conference call, noting that $5.6 billion in annual trade and tens of thousands of jobs are on the line if a complete ban on imported scrap items not limited to metals goes into effect.
China has noticeably increased its scrutiny of scrap shipments following a February announcement—dubbed “National Sword 2017”—that it intends to crack down on shipments of scrap and waste products entering the country.
U.S. scrap exporters have been holding their breath as they await clarification on how the policies in China will affect their businesses, although rising reports of rejected containers are fueling concern that scrap shipments could be on the chopping block.
Rumors regarding an all-out ban on nonferrous scrap metal have been flying around the industry over the past few weeks, with some indicating imports of inferior nonferrous grades with lower yields could be banned within one to two years while higher-valued nonferrous metal could be banned within three to five years.
“Things have gotten more intense. Nobody knows what’s going on, that’s the bottom line. Nobody knows for sure what the Chinese government is up to. There’s a lot of smoke, which means there is fire. Are they going to ban all Category 7 scrap from being imported into China? We have a hard time envisioning that drastic revision, but we don’t try to figure out what the Chinese are doing,” one exporter said.
Right now, it is business as usual. “I’m still selling all the zorba without issues. However, there’s a lot of uncertainty. People don’t know what’s going on. Some have confidence, others aren’t so confident,” a second exporter told AMM.
The increase in rejections is causing confusion as the Chinese government hasn’t issued guidelines or parameters to help clarify what will and won’t be banned.
“There is nothing in print. Nothing that has been published. Customs brokers are having to back channel conversations with the government, and they‘re saying this is what is
acceptable and this is what isn’t acceptable. We’re not being disrupted like the paper and plastic recyclers though,” a third exporter said.
Wiener and other ISRI staff stressed that they are taking all rumors seriously, but at this point are urging recyclers not to panic as no official statements from the government have been released thus far to indicate specifics.
“We do continue to get intel from members and customers on various rumors coming out. ... Nothing is official. We think we may hear something official by the first or second week of July. We are taking these rumors seriously,” Wiener said.
National Sword and any accompanying ban on scrap metal imports by China is paramount to the industry, as the implementation could upend the global scrap trade.
BRAD MACAULAY
National Sword major concern for scrap: ISRI
The potential impact of more stringent environmental policies in China and rumors of a looming ban on imports of certain scrap items is being closely monitored by the Institute of Scrap Recycling Industries.
American Metal Market 11SEPTEMBER 2017
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Many in the industry have been left feeling uneasy about China’s noticeably elevated scrutiny of scrap shipments following its February announcement—dubbed “National Sword 2017”—that it intends to crack down on shipments of scrap and waste products entering the country.
Isolated reports of rejected containers are only fueling the fire of uncertainty, with some fearing that low-grade scrap shipments could be in the crosshairs.
“We had multiple containers returned and I know others that have too. China is really cracking down and it’s concerning going forward,” one exporter said, noting that the material was sold back into the United States although details regarding the rejection remain vague and the overall rules for shipping into the country are unclear.
“If they find (anything wrong), they will send the whole container back to America. That’s a very expensive mistake, so we really have to know what we are sending,” a second exporter said.
Shredded insulated copper wire has so far received some the greatest
scrutiny due to its appearance, market sources said.
“(Shredded insulated copper wire) material looks bad, and it’s a matter of how to make it look better. There are some customs people saying if its baled they’ll take it and if it’s not they’ll kick it back. It is going to get worse before it gets better,” a third exporter said.
Acting prudently, a fourth exporter said it has already invested in processing technology to better sort lower-grade scrap material. “We haven’t heard of any shipments getting rejected yet, but we know it is coming. China’s new policy is to have less low-grade scrap,” this exporter said.
However, market participants said there has yet to be cause for panic due to the lack of transparency associated with the announcement and details on what, specifically, will be banned.
“I’ve heard of an uptick in claims. I haven’t seen that yet, but a lot of times they’re going to bigger consumers. We’re business as usual, but we make clean products with higher recovery,” a fifth exporter said.
“We’re not sure what repercussions there will be, but the Chinese are
tightening up,” a sixth exporter said. “(We have had) no problems
shipping Zorba as of now... (but we) had a consumer stop taking our fines for about two weeks, then they started to take them again,” a seventh exporter said.
The possibility of a rejected load or an outright ban in the future could change the face of the trade, with sellers looking for different outlets at home and abroad, exporters said.
The possibility of tighter standards could make U.S. processors contenders for the future market share, although some domestic processors have yet to see a spike in business.
“We’re a wire chopper, but so far we haven’t seen anyone jumping for joy. In fact, we’ve had some Chinese buyers in the plant over the last week that bought their usual stuff,” one processor said.
BRAD MACAULAY
Exporters sweat over China’s scrap crackdown
U.S. scrap exporters are holding their breath as they await clarification on how more stringent environmental policies in China will impact the global scrap trade.
