You are here

Coronavirus outbreak dents impact of China's scrap metal tax relief

rk_copper_190220.jpg
China's exemptions on import duties for US copper and aluminium scrap will not massively increase shipments of the material as metal demand has dropped because of the effects of the coronavirus outbreak.

[BEIJING] China's exemptions on import duties for US copper and aluminium scrap will not massively increase shipments of the material as metal demand has dropped because of the effects of the coronavirus outbreak.

China on Tuesday granted tariff exemptions on duties of 25 per cent tariffs on US copper scrap and 50 per cent on aluminium scrap. The taxes were in place since 2018 as part of its trade war with the United States.

At the same time, Beijing is fighting the novel coronavirus outbreak that has killed more than 2,000 people and disrupted logistics, labour flows and economic activities.

"It is too little too late," said David Chiao, president of US-based scrap firm Uni-All Group. "Under coronavirus control, migrant labourers are not able to get back to their posts", impacting scrap metal processing in China, he added.

Copper scrap imports from the United States were 89,287 tonnes in 2019, a six-fold decline from 2017, while aluminium scrap fell 38 per cent during the period, China's customs data showed.

The "current trade map is pretty much settled already. Those who left mainland China will not go back," Mr Chiao said, adding Beijing's goal to cut off solid waste imports by end-2020 will leave little time for the exemption to make an impact anyways.

China currently classes all scrap as solid waste and has already restricted scrap imports through a quota system.

"The Chinese government continues to issue smaller and smaller quotas in their attempt to close the market to imports of high quality scrap commodities from all sources," said Adina Adler at US-based Institute of Scrap Recycling Industries, adding that the exemption would have little impact.

China, the world's biggest copper consumer, will recategorise high-grade copper and aluminium scrap meeting certain standards as a resource from July 1. However, there are no existing customs codes for this recategorised metal so it would not be subject to the existing tariff.

Demand is also a concern, as many industries are suffering from lower consumption because of the epidemic.

Michael Lion, president of Lion Consulting Asia and former head of Sims Metal Management Asia, said the tariff exemption in theory could help flows of scrap, but the virus impact could "profoundly affect overall short-term demand that is ... very challenging to assess and quantify".

REUTERS