China to Issue 1st Batch of Metal Scrap Import Licence by June-End

China's ecology and environment ministry, which regulates the air, water and solid waste quality in the country, has announced on 29th May'19 that it will fast-track the process of issuing import licenses for scrap metal consumers and could issue the first batch of the licences by the end of June'19, depending on meeting of the application requirements.

In January 2019, the Ministry had shifted 8 kinds of solid wastes such as steel scrap, copper scrap and aluminium scrap to list of Restricted Imported Solid Wastes. Under the new policy introduced in Jan'19, it is necessary for scrap metal importers based in China to obtain import licences by 1st July'19, for importing ferrous and non-ferrous scrap from overseas for the second half of the year, post which the government aims for a complete ban on import of 24 kinds of solid wastes. For this time period, each importer will be assigned a quota of permissible tonnage of imports, while further details are still awaited.

The provincial environmental departments started accepting licence applications from scrap metal importing companies from May'19, however the announcement for the same from ecology and environment ministry came only by late April, thus creating a slight confusion among the applicants.

As per the policy, only those companies that are legally registered to process and consume scrap metal and have storage and processing facilities satisfying the environmental standards, will be issued the import licences. Other conditions include applicants not having breached any emissions rules in the past one year and never having violated any environmental rules in the past two years such as importing any of the banned scrap or obtaining licences illegally through false documentation. Companies are also not allowed to import scrap through any 3rd party, as per the said policy.

China being the largest global importer of copper and aluminium scrap metal, these licence requirements aim towards reducing the import volume of materials containing higher impurities and a lower metal content, in order to encourage imports of cleaner and "furnace/smelter ready" scrap, thus limiting the requirement of further processing and lowering its environmental impact.

These stringent policies by Chinese government have not been well received by many scrap processors in China and in order to avoid the same, many of these companies have relocated to other countries such as to Hong Kong, Malaysia, Indonesia, Thailand or Vietnam.

Chinese ferrous scrap imports fell 85% Y-o-Y in Q1 2019 - Chinese ferrous scrap imports in Q1'2019 hit 3 years low since the data is maintained with SteelMint. The country imported 70,000 MT ferrous scrap during the first quarter of 2019, down 85% on year against 456,549 MT in Q1'2018. While imports plunged 75% Q-o-Q against 270,000 MT in Q4'2018. According to reports China imported 3.43 million tons of total solid waste in Q1 CY'19, falling by 37% Y-o-Y.