China Planned Aluminium Scrap Ban Concerns India’s Aluminium Smelters

China Planned Aluminium Scrap Ban Concerns India’s Aluminium Smelters

Restrictions soon to fall into place on scrap aluminium imported into the People’s Republic of China has aluminium producers in India concerned that the move will result in a flood of aluminium scrap washing over their country’s shores.

In a step to ultimately banning their importation entirely by next year, Beijing intends to add aluminium scrap to the Restrictive Imports List in July. As China has been the global leader in importing aluminium scrap to date, Indian producers see the move as an even bigger incentive to dump such aluminium scrap on the domestic market.

India’s aluminium firms have frequently called for an upward adjustment to aluminium scrap import tariffs in recent months, as the 2.5 percent tariff that is currently assessed does not do enough to protect domestic producers from being undercut by imports.

Experts see increased aluminium scrap imports as a key reason for the continuing decline of domestic smelters’ market share over the past several years. In the most recent fiscal year, total aluminium imports rose by 19 percent, while scrap aluminium imports rose by 21 percent. Overall, Indian smelters’ market share has fallen by 20 percent over the last 8 years.

According to an industry source who spoke with domestic media earlier this week, the biggest gate through which the offending aluminium imports passes is that of the country’s many free trade agreements.

“Majority of aluminium import into India are coming through the FTA route. Imports from ASEAN form a major share of value added imports led by Malaysia, leveraging the India-Malaysia FTA which allows imports into India at zero duty while applying 25-30 per cent duty on export of India aluminium products to Malaysia.”

“The ongoing negotiations for Regional Comprehensive Economic Partnership (RCEP) includes China and ASEAN as partner countries,” the source continued. “The presence of China is a severe threat which will worsen India’s trade deficit, adversely affecting the Indian aluminium industry. In this backdrop, the domestic aluminium industry is requesting for a relook at the FTA, specifically for a strict Rules of Origin criteria is needed to check cheaper imports into India. The industry is also requesting for inclusion of Chapter 76 (Aluminum and Articles thereof) in the negative list of imports under RCEP and asking for avoiding circumvention of Rules of Origin criteria the product originating condition be proposed with change of tariff heading and value addition.”