US exports of scrap metal to China hit by trade war

US scrap metal exports to China are slumping as an escalating trade dispute between the world’s two largest economies weakens demand, according to a Beijing-based trade body.

The China Non-Ferrous Metals Industry Association said that steep tariffs imposed this year have made it “no longer feasible” to import scrap aluminium from the United States.

Antaike, the association’s research division, projected that Chinese imports of scrap aluminium are set to drop by about 24 per cent, or 150 000 tons, this year. Last year, the US exported almost 620 000 tons to China.

With the trade war between Beijing and Washington escalating, US scrap exporters will likely feel the pinch of a 25 per cent duty China has imposed on copper and aluminium waste. Levies on US scrap metal, waste paper, and plastics arriving in China began on August 23 after China announced new tariffs on $16 billion of US goods earlier in August 2018. Aluminium scrap was hit with tariffs in April 2018.

During the first quarter of this year, around 44 000 tons per month of copper scrap were exported from the United States to China, according to reporting from Reuters. Reuters also reported that Chinese importers have been scrambling to resell shipments of US copper scrap on their way to China, and that they will have to offer discounts to get the unwanted cargo off their hands.

Sims Metal Management and Nucor Corp’s scrap subsidiary are major exporters of US scrap to China. Last year, the US sold $6 billion of scrap to China. Copper scrap exports in 2017 amounted to over a half a million tons worth $1.8 billion.

Beijing had already imposed restrictions on waste imports last year, as China attempts to source more recycling material domestically. China’s scrap metal imports decreased by a third in the first half of 2018, according to Reuters, and imported waste plastic dropped to almost zero this year.

Some Chinese importers may reluctantly end up paying the 25 per cent tariff, in an attempt to mitigate the risk of transshipment. That’s what happened to a shipment of soybeans stranded off the Chinese coast near the port of Dalian for a month recently. Importers finally took delivery of the commodities and paid the duties.