In lieu of scrap, China imports semi-finished aluminium

The volume of unwrought aluminium imported into China surged in June 2020, as that nation’s economy and automotive industry rebounded from its bout with COVID-19, according to Recycling Today. A variety of factors have contributed to China’s appetite for the metal, with one of them being its unwillingness to feed furnaces with imported aluminium scrap.

Citing data from the General Administration of Customs of the People’s Republic of China (GACC, formerly GAC), Shanghai Metals Market (SMM) says imports of unwrought aluminium alloy “totalled 466 500 metric tons in the first half of 2020, soaring 706 per cent from the same period last year.” The nation’s June 2020 figure of 131 000 metric tons was 754.5 per cent higher compared with a year earlier.

China’s government has only been allowing aluminium scrap to enter that nation on a quota basis in 2020. It has issued those quotas (which also apply to other scrap metals, plus paper and plastic) in 11 batches thus far, with most of them consisting of relatively small amounts of aluminium scrap.

The ninth batch of quotas, issued in early July, included allotments for 200 000 metric tons of aluminium scrap, causing expectations that the second half of the year could consist of larger volumes. But the two batches to follow approved only 3 700 metric tons of aluminium scrap.

The lack of scrap, along with the global COVID-19-related economic slowdown, has also caused Chinese producers to export less finished and semi-finished aluminium in 2020, according to SMM. The media outlet says: “Orders decreased [at Chinese production sites] in June amid concerns about the availability of secondary cast aluminium alloy raw materials.”

The difference has been noticeable for scrap traders in North America. From 2007 to 2017, China imported between 1.9 million and 2.8 million metric tons of aluminium scrap annually, with scrap from the United States making up a double-digit percentage of that total each year. Each of those years, China more than doubled the amount of aluminium scrap it imported compared with the second-ranked nation, and in 2010 it quintupled the second-place finisher (South Korea).

In the first six months of 2020, the US sent 117 000 metric tons of aluminium scrap to China, according to US Census Bureau data. That placed China fourth, behind Malaysia (165 000), South Korea (142 000) and India (123 000).

China imported more aluminium than it exported in July
This is a very rare phenomenon. China, after all, is the world’s largest producer of the light metal, accounting for 57% of global output in the same month, according to the International Aluminium Institute.

It is normally a huge exporter of semi-manufactured products (“semis”) – around 5.2 million tons in both 2018 and 2019 – with no need to call on extra supply from the international market.

The last time China turned net importer was in 2009. Most expect this import surge to be short-lived, as it was in 2009, but the world has changed since then and it’s possible we’re also seeing underlying structural shifts in the aluminium market.

Starting in July this year, and for the first time, millions of tons of copper and aluminium scrap were to be shipped into China not as waste but as merchandise, after the country announced its timetable for the renaming of high-purity non-ferrous scrap as recyclable materials.