"New Normal" in China Metal Scrap Importing (August 4th, 2015)
In recent years, China has gradually become the world's largest importer of non-ferrous metal scrap. The amount of non-ferrous metal scrap imported increased from 3,000,000 tons in 2001 to morethan 7,000,000 tons in 2010, taking 2/3 of total domestic non-ferrous metal materials. But since the "12th Five-Year Plan", this continued growth momentum has changed. In 2014, China's import of non-ferrous metal scrap is 6,210,000tons, which is 1,000,000 tons less than the amount of import in 2010. The copper scrap import decreased more than 10% for two consecutive years, imports of aluminum scrap decreased for four consecutive years. For 1-6 months of this year, China's imports of non-ferrous metal scrap is 2,720,000 tons, dropped by about 5 percent from last year's same period. What are the reasons for the import of scrap metal fell endlessly? I think we could look from the supply and demand aspects.
On the one hand, since 2010, influenced by the international financial crisis and the European debt crisis, the advanced economies has been experiencing the overall weak economic growth and consumption slowdown, which caused the decrease of waste amountand higher price. On the other hand, because of China's population dividend reduction and increased environmental protection threshold, the cost of dismantling and processing of waste rises up, which bring slump in market.Thinking of these two factors, it is not surprising that China’s imports of non-ferrous metal scrap obviously declined during the period of “12th Five-Year Plan”. It is worrying that the potential impact of this continuing decline is not yet fully recognized.
First of all, the environmental propertiesof importing non-ferrous metal scrap are underestimated. For a long time, China's government and people's understanding of the import of non-ferrousmetal scrap mainly focus on its resource properties, lack of awareness of their environmental attributes. In fact, Not only the imports of non-ferrous metalscrap could bring cheap raw materials, but also can save natural resources,also a decrease of the cultivated land reduction and pollution emissions causedby mining rock burst (pollution emissions including solid waste emissions and greenhouse gas emissions).
Secondly, non-ferrous metal scrap is a valuable resource for all countries in the world. The reality shows that the international non-ferrous metal scrap trade is not a“unilateral dumping” that developed countries conducted on developing countries, but the majority of developed countries are both exporting and importing roles. After years of efforts, China has become a major country in the ranks of non-ferrous metal scrap imports. Facing the challenge of rise in the cost of manual dismantling, the advantage of low grade waste digestion come down, then how to continue to maintain the competitiveness of China's imports of non-ferrous metal scrap, which urgently need to study and guide on the policy level. In addition, it is also a problem to study about the carbon emissions transfer closely related to the international trade of non-ferrous metal scrap.
Third, China has the world's most stringent regulatory system of scrap metal imports. At present, China's metal scrap import regulatory system and measures should be the most stringent in the world, not only having dual certification (foreign suppliers AQSIQ license and domestic China buyer’s consignee certificate), and double inspection (CCIC Inspection and CIQ inspection). After goods arrived at port, 100% open package inspection will be conducted. All waste material shall be classified during shipment, and doping ratio could not exceed 2%(?). In recent years, the General Administration of Customs carried out several special operations to combat thesmuggling of waste (such as "Green Fence" action), illegal actions like reselling license, conceal, smuggling and others has been suppressed. In 2013, China customs and foreign customs launched the Earth Goddess action together. Ministry of Environmental Protection also approved the construction of 21 renewable resources industrial park, which effectively controlled the environmental risks during processing and achieved good result.
Fourth, the import of non-ferrous metal scrap in China is in an unprecedented difficult situation. In recent years, with the profound adjustment of international political and economic pattern, the international trade situation for non-ferrous metal scrap also changed, China's traditional advantages in non-ferrous metal scrap are no longer outstanding, facing the severe challenges.
We should base on the current situation, draw lessons from practice of developed countries, timely adjust the policy guidance, and strive to develop new situation of non-ferrous metal scrap imports, providing better service to China's manufacturing and economic development.
Fifth, imports of non-ferrous metal scrapis difficult to be replaced, it will show the “New Normal". In recent years, China's domestic non-ferrous metal scrap recycling continues to grow, but China's metal scrap condemning cycle has just come, the scrap generated by domestic market can not fully meet the needs of renewable non-ferrous metals industry, and in the next ten years, China's per capita consumption of non-ferrous metal resources will double than now. Coupled with the issue proposed in “China Manufacture 2025” that green manufacturing need focus on solve the environment and resource problem restricting economic development, it can be predicted that the development space of China's renewable non-ferrous metal industry is still very large. Especially under the conditions of strengthening energy-saving and emission reduction, we expect in the next 5-10 years, the import of scrap will continue to be the important source of raw materials for non-ferrous metals industry, China's demand for foreign high quality scrap will not be reduced.
Based on the above judgment, I believe that the “new normal” of non-ferrous metal scrap import will show the following characteristics:
First is imports reduction. With the increasing domestic labor costs, and strict threshold from environmental protection, China's advantages on imports of non-ferrous metal scrap are increasingly weakened, which make the decline in imports is difficult to reverse.
Second is reduction of types imported. With the transformation and upgrading of manufacturing industry, the demand for raw materials is more sophisticated, so in the future it is bound to selectively import high quality types scrap which are more suitable for China's processing of scrap non-ferrous metals, to further strengthen the advantages of China's manufacturing industry.
The third is the reduction of designated enterprises. We have more than 600 enterprises who is qualified for dismantling of imported metal scrap, in order to facilitate supervision and to form astandardize order, it is bound to reduce the number of designated enterprises in future, to encourage those having long-term import experience and stable supply of materials engaged in the import and processing of non-ferrous metal scrap.
In addition, the industrial park for imported renewable resources is an important carrier for imported non-ferrous metal scrap processing, in future it is bound to further strengthen the construction and optimization of the park, and promote the import and dismantling of designated enterprises to enter the park for purpose of centralized supervision.
To sum up, as an important raw materials source for renewable non-ferrous metal industry, the resources and environmental advantages of importing non-ferrous metal scrap are very important for the transformation and upgrading of China's manufacturing industry, so in the short term, it is difficult to be replaced. At present, the world economy is still in the depth of the adjustment, also China's economic downward pressure is still increasing, so the priority should be the scientific judge of nonferrous metal scrap import policy guidance, to keep up with theeconomic structure transformation and upgrading, actively adapt to the new normal and leading the new normal, through better use of international markets to optimize the allocation of resources, to promote the non-ferrous metal industry with growth on quality, making new and greater contributions in saving resources, environmental protection and energy saving and emission reduction.
Chinese Author: Zhang Lin, from CMRA
Translated by A.T. Intl, a professional consulting agent on exporting scrap to China and AQSIQ license registration agent. For info exchange and AQSIQ License registration, please email to cn@aqsiqca.com
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