DhakaTribune
Monday April 23, 2018 11:23 PM

As China restricts scrap, metal companies look to process copper abroad

  • Published at 12:50 AM January 10, 2018
As China restricts scrap, metal companies look to process copper abroad
Photo:Reuters

Two other emerging Southeast Asian scrapyards, Malaysia and the Philippines, were also among China’s top 10 scrap copper suppliers, the latter’s shipments jumping by over 520%

As China tightens restrictions on imports of foreign waste, Chinese metal recyclers and even smelters like Jiangxi Copper Co are increasingly looking to use Southeast Asian countries as an alternative location for the processing of copper scrap.

China relies on imports for around half of its scrap copper needs but told the World Trade Organization last year that it would stop accepting certain types of foreign solid waste, including metals, from 2018 if they did not meet stricter impurity thresholds.

Analysts say this cut off a key source of supply for the world’s largest copper consumer and boosts refined copper makers, which are likely to see an increase in demand.

Shanghai copper futures were roiled last year by China’s moves to ban imports of Category 7 scrap – such as coiled copper cable and waste motors – from 2019, with import quotas already starting to dry up. And, in a more immediate development, traders in China now find themselves unable to import scrap copper if they cannot show they are scrap end-users.

Eyeing Southeast Asia

China’s top three sources of scrap copper in 2017 were Hong Kong, the United States and Australia, which accounted for around 45 percent of imports in the first 11 months of the year.

But customs data also point to a booming copper scrap trade between China and Southeast Asia. In the January-November period, Chinese imports of copper scrap from Thailand jumped 94.9% year on year to 146,185 tonnes. That followed a 355% jump in 2016 from the previous year.

Two other emerging Southeast Asian scrapyards, Malaysia and the Philippines, were also among China’s top 10 scrap copper suppliers, the latter’s shipments jumping by over 520%.

A source at one scrap recycler in Malaysia said more Chinese companies had been setting up plants in the country over the past couple of years, importing scrap copper from around the world. But she said they only took high-quality copper scrap.

Vietnam, Indonesia, Myanmar, Laos and India were named by industry sources as possible alternative scrap-processing destinations.

And it is not just small, private players weighing such moves. Even the state-run Jiangxi Copper, which uses scrap as well as copper concentrate to make refined copper, is considering setting up facilities in Southeast Asia because of the import ban, company sources said.

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