Page 78 from: West Coast report + Plastics Special
MARKET ANALYSIS
Hopes rise on warmer
US-Chinese sentiment
Traders hope that negotiations between China
and the US proposed for September will hold
the key to punitive trade tariffs being cut.
urge all of our members to be cautious
about quality according to Basel
Convention requirements,’ he said.
According to one of ISRI’s latest weekly
reports, only nickel prices are in positive
territory in London. Macquarie is report-
ed to be bearishly forecasting average
2020 prices of US$ 5600 per tonne for
copper, US$ 1803 per tonne for alumini-
um, US$ 2063 per tonne for zinc, US$
1725 per tonne for lead, and US$ 13
250 per tonne for nickel.
AURUBIS BLUES
It’s been a tough summer for Aurubis
which has scrapped its internal invest-
ment project Future Complex
78
The big news since the last issue of RI
was life being breathed back into trade
relations between the US and China at
the start of July. US President Donald
Trump and the Chinese president Xi
Jinping shook hands at the G20 Summit
in Japan and agreed to resume negotia-
tions, expected in September. Trump
said his meeting with Xi had been
‘excellent’ and that the relationship with
China was ‘right back on track’. In the
meantime, the US says there will be no
new tariffs on Chinese imports and
China is reining back from imposing its
own new tariffs.
ECONOMIC IMPERATIVE
Observers believe the economic conse-
quences of continuing the dispute
forced both men to come together. In
June, the International Monetary Fund
calculated that the tariff war would cost
US$ 455 billion in lost output next year
– more than the size of South Africa’s
economy.
To substantiate this, China’s economic
growth in the second quarter of 2019
slowed to 6.2%, although that remains
in line with Beijing’s target of between
6% and 6.5% for this year. Even so, this
growth in gross domestic product was
the lowest for nearly three decades.
This has undoubtedly been affected by
the US-China trade war. On the other
hand, some Chinese data – fixed asset
investment, industrial production and
retail sales – was stronger.
US EXPORT TRENDS
Latest data from the US Census Bureau
and the US International Trade
Commission indicates that US exports
of aluminium scrap has more than
exceeded the fall in scrap being sent to
China. Overall, US aluminium scrap
exports are up nearly 17% this year
despite Chinese import restrictions.
From January until May this year, 764
828 tonnes were exported globally, well
up on the 655 640 tonnes form the
same period in 2018. To compensate
for the 28% fall in Chinese transactions,
exports to India are up more than 90%
this year, with other significant gains
including South Korea (+30%), Malaysia
(+39%), Indonesia (+123%), Taiwan
(+73%), and Mexico (+21%).
Official trade data also indicates that US
copper scrap exports to China aver-
aged 12 000 tonnes per month in April
and May, up from just over 5 000
tonnes in January as shippers moved
more material ahead of the 1 July
import deadline. However, copper scrap
exports to China so far this year (Jan –
May) are down more than 75% (198 989
tonnes last year; 48 479 tonnes this
year).
Although there have been significant
increases to other countries during this
period (Malaysia +263%; India +107%
and South Korea +50%), overall ship-
ments were down: 382 746 tonnes this
year compared to 391 793 tonnes in
2018. Noteworthy is a reported 47%
increase to Hong Kong.
CHINESE QUOTA CHANGES
The situation continues to flux in China.
The Bureau of International Recycling
(BIR) reported in July that the China
Solid Waste and Chemicals
Management Bureau, part of the
Ministry of Ecology and Environment,
had issued import quotas for another
124 450 tonnes of high-grade copper
scrap and 306 930 tonnes of high-grade
aluminium scrap. The key metal-recy-
cling province of Guangdong, which
had previously received no quotas, was
included.
BIR said it expected metal scrap com-
panies in other provinces such as
Jiangsu and Shandong provinces to be
listed in the next quotas. In 2018, China
imported a total 22.414 million tonnes
of solid waste, down by 47% compared
to 2017. Among this were 2.61 million
tonnes of copper scrap and 1.56 million
tonnes of aluminium scrap, according to
customs data.
David Chiao, president of BIR’s Non-
Ferrous Metals Division, wrote in the lat-
est BIR Mirror that some uncertainty dis-
sipated when Beijing released its batches
of approved copper and aluminium
scrap import quotas for the third quarter
of this year, even though some of the
approvals were not released until almost
two weeks into July.
‘All of the uncertainties, such as rising
trade tensions and regulatory/policy
changes, are making our business even
harder. And that’s not to mention wor-
ries of a recession that usually follows a
decline in world trade volumes. South
East Asian countries are moving to
impose tight controls on inbound scrap
over contamination fears. To keep has-
sles to a minimum, even if there is no
CCIC pre-shipment inspection, I would
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