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Push underway to loosen China's copper scrap ban: Home

Miami — An intra-government fight is underway in China to get some relief from that country's sweeping ban on copper scrap imports, so that at least some scrap with very high purity can be imported, a scrap market expert said Thursday.

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"State-run companies within China are telling the government, 'We need the scrap,'" Andy Home, a metals columnist with Reuters, told S&P Global Platts on the sidelines of the American Copper Council meeting in Miami.

Speaking at the conference, Home said China is putting in place a very restrictive ban on what the country terms "foreign garbage" that will ban from the country virtually all forms of copper scrap except those with 99% purity. The ban, which builds on a previous export ban that took effect in 2018, will be in force by the end of 2020.

Related story: Copper to see modest demand growth in 2020, but risks loom: analyst

"Ninety-nine percent purity is copper cathode" he told Platts. The companies in China fighting the latest measure are trying to persuade the Chinese government to lower the purity standard so that copper scrap grades with 94%-95% purity can be allowed into the country, Home said. The companies had hoped to have the more lax standard in place before the new rule took effect, he said. "But it hasn't gone so smoothly."

Home told the ACC conference that a big part of the problem is that China lumps together all scrap materials as "garbage," so the best solution to a less restrictive rule is to simply get high grades of scrap categorized under another name.

Home said the "war on foreign garbage" is poised to get even worse, as similar bans are taking root in other Asian countries, such as Cambodia. For now, the US has been adapting to China's scrap ban to some extent but exporting its copper scrap to Malaysia, where it is further processed, then sold into China, Home noted.

Home estimated that since China's first scrap ban took effect in 2018, global trade in copper scrap has declined by 12%, with EU exports down 24% and US exports off 9%. Citing data from the International Copper Study Group, he said China's copper scrap imports fell by 32% in 2018 as a result of the ban, while "implied purity" of what was imported into China rose in that time to an average 66%.

This "lost trade" in high-grade copper scrap has been about 250,000 mt and 450,000 mt for copper-alloy scrap," Home said. He also cited a Goldman Sachs estimate that China's scrap ban has reduced scrap supply by roughly 300,000 mt. That is especially significant, given a Reuters analysts poll that points to a 191,000 mt deficit in the copper market in 2020, he said.

Until the 2018 ban, the US had exported most of its copper scrap to China, with the US representing about 20% of total copper scrap generated in 2017. That same year, China took in about 47% of the world's copper scrap, Home said.

-- Laura Gilcrest,

-- Edited by Richard Rubin,