The government of the People’s Republic of China issued the first round of aluminium scrap import quotas earlier this week. The quotas, which are set to go into effect on July 1, will see a drop in aluminium scrap shipped into Chinese ports of almost 85 percent.
As of July 1, aluminium scrap imported into the Middle Kingdom will be restricted to a total of 54,256 metric tons for the third quarter. Though experts say the overall impact of quotas is not completely predictable at present as the total number of import quotas for the quarter has yet to be released, the restrictions are significant.
In the third quarter last year Chinese importers received 349,510 metric tons of scrap aluminium. The quotas to be implemented for the coming quarter will operate an average aluminium smelter for less than two months according to projections.
“This is only the first batch and these importers are mostly from the Ningbo area,” explained a United States scrap exporter to Argus Media this week. “We have talked to one of the consumers on the list, and they are saying this is only enough copper scrap volumes for 30-40pc of their capacity.”
Argus indicated that traders expressed similar sentiments for the aluminium scrap metal situation.
Chinese buyers told media outlets that the quotas for southern buyers are likely only the beginning, as they expect limits on buyers in the country’s northern reaches to be issued shortly. A second round of quotas for southern importers in Guangdong and elsewhere is likely they said, even as soon as the next few weeks.
In any event, buyers expect a buying binge up front followed by long stretches of doldrums, both of which are likely to wreak havoc on pricing.
“If any buyers wish to import before the end of September, they must prepare for shipping in early July,” warned an American exporter. “After that they will stop buying until they have dealt with the fourth quarter volumes.”