Non-ferrous: ‘The final straw’ for China?

Global – Although details and a timetable for China’s restructuring of its import permissions for recyclables such as metals, paper and plastics are still awaited, the country could well have reached a tipping point on the import issue, according to David Chiao, president of the BIR non-ferrous metals division.

Writing in the latest World Mirror, Chiao relates how a major Chinese aluminium consumer recently placed an import order for Zorba but was supplied with demolition waste containing no metal value at all – an example of ‘importing foreign waste’, it was reported by Chinese TV. ‘Could this be the last straw?’ Chiao asks, before adding his own response. ‘I think it is very possible.’

In the same publication, Ma Hongchang – BIR’s advisor on regulatory and policy developments in China – confirms approval of a plan to reform the country’s import structure, to include ‘a drastic reduction in both the quantities and items imported’. The government will issue its new import catalogues gradually and more materials will be put on the ‘prohibited’ list, he adds.

Following demonetisation, meanwhile, liquidity has already begun to flow back into business in India and domestic demand has risen again, not least because the government ‘seems seriously committed to pushing big financial reforms, as well as fast-tracking mega infrastructure projects’ which will boost requirements for raw materials. And eastwards into Malaysia, domestic scrap prices are said to be ‘relatively weak’ but export duties are voiding export arbitrage opportunities such that locally-generated scrap is remaining within the country.

In Mexico, demand for scrap for secondary aluminium grade production has remained healthy whereas orders for UBC and other rolling mill-related grades ‘has lost some steam’. Most well-established scrap yards in Mexico are said to be enjoying robust, healthy volumes. North into the USA, UBC spreads are expected to widen because mills’ order books extend for up to two months while the Midwest premium could weaken further as scrap is ‘readily available’.

Feedback from Europe suggests ‘a shift from a buyer’s to a seller’s market’ as ‘shrinking’ scrap availability coincides with ‘a lower LME’.

This article is based on the latest Non-Ferrous Metals World Mirror produced by the BIR world recycling organisation for the benefit of its members.