China scrap metal firms face pressure from import curbs: official

SUZHOU, China (Reuters) – Scrap metal regeneration companies in China are likely to come under “huge pressure” after the country moved to ban imports of more types of solid waste, the head of a Chinese metal recycling body said on Thursday.

The country’s recycled metal output would grow more slowly, or even decline in some years, following the introduction of new rules from the end of 2018, Shang Fushan, president of the recycling branch of the China Nonferrous Metals Industry Association told an industry forum.

China tightened impurity thresholds on imported solid waste from March 1 this year. Next year, imports of 16 products, including Category 7 scrap , such as coiled copper cable and waste motors, will be banned. This category accounts for about 20 percent of scrap copper imports.

The crackdown on waste imports is part of Beijing’s “war on pollution” and aimed also at helping the country move up the global supply chain.

The Chinese government had previously approved the establishment of a number of scrap metal regeneration firms in coastal regions such as Tianjin, Fujian and Guangdong to process imported waste, Shang said in Suzhou, in China’s eastern Jiangsu province, which is also a hub for foreign scrap importing.

“However, due to the tightening regulations on overseas waste imports, these processing firms will be under huge pressure because of a lack of material,” he said.

The industry depended heavily on imported scrap metal, which made up about 30 percent to 40 percent of raw material, he said.

The changes would lead to “a further increase in the portion of domestic supply of the raw material,” but it would take time to fill the void, Shang said.

Last year, China imported a total of 5.74 million tonnes of scrap metal, mainly scrap copper and aluminum, according to official data, but imports have fallen sharply year on year so far in 2018 as quotas have been progressively tightened.

The crackdown has prompted some Chinese companies to move to Southeast Asian countries to seek raw materials. However, Shang warned of the “uncertainties” of investing and building factories abroad.

“It is not clear whether Southeast Asian countries will also tighten import policies and it is also hard to say how much processing capacity these countries are willing to accept,” he said.

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