Are scrap metal imports regaining favor in Asia?

Are scrap metal imports regaining favor in Asia?

China cuts U.S. nonferrous tariffs, while Indonesia reportedly eases its regulations on ferrous scrap.

February 19, 2020

After several years of scrutiny and trade barriers, February reportedly brought better news for scrap metal exporters in North America, Europe and other places with scrap surpluses to be exported to Asia.

A Reuters report in mid-February indicates the Indonesian government has responded to pleas from the Indonesian Iron & Steel Association seeking a more welcoming attitude toward imported ferrous scrap.

The report quotes Indonesia Industry Minister Agus Gumiwang Kartasasmita as saying the nation’s steel industry running at a mere 40 percent capacity, partly because of overly strict import rules for ferrous scrap restrict raw material supplies.

“We’ve decided for scrap metal, we will relax their imports, because we can see the need for scrap metal in the domestic market,” Kartasasmita is quoted by Reuters as saying. Relaxed rules could allow Indonesian steelmakers to bring in up to 5 million metric tons of imported ferrous scrap, according to the ministry.

Also in mid-February, China’s government reportedly granted tariff exemptions* or reductions on duties that had been in place since 2018 as part of the ongoing trade dispute between China and the United States. For aluminum scrap, the tariff has been reduced from 55 percent to 52.5 percent, and for copper scrap, the tariff has been reduced from 30 percent to 27.5 percent.

According to Chinese customs agency data cited by Reuters, copper scrap imports into China from the U.S. in 2019 were just one-sixth by volume of what they were in 2017, while aluminum scrap trade between the two nations fell by 38 percent in the same period.

While the reduction* of the tariff is welcome news for U.S. nonferrous scrap traders, it comes just as activity in the Chinese manufacturing and metals production sectors has been severely curtailed by the COVID-19 virus epidemic.

*This article originally misreported that the tariffs on aluminum and copper scrap imports to China from the U.S. had been removed entirely. In actuality, they have been modestly reduced.