“On the Rise: This is Malaysia’s Latest Copper Scrap Center”

China is a little short of copper waste. It is essentially a question of its own making. China has increasingly limited imports of content legally classified as “waste” throughout its larger pollution battle. By the end of this year, Beijing had planned to prohibit all copper scrap imports in the same manner as certain types of “international waste” such as recycled plastic had already been shut out.

Since then, under strain from its own copper industry , the government has been panicking over the disappearance of a significant part of China ‘s copper supply chain. Imports of higher quality copper scrap have been reclassified from “waste” to “stock.”

Meanwhile, China’s imports of U.S. copper scrap fell to 89,000 tons last year from 352,000 tons in 2018, according to the customs department of the government. What was delivered was exceptionally high-purity material with an overall tacit copper content of almost 90%.

Nevertheless, none of it has existed in China for a long time. Any big U.S. shipment arriving in the third quarter of last year passed customs under the “collection of imported content” label, suggesting that there was no permanent effect on China’s domestic scrap industry.

Everything the United States used to export to China it ships to Malaysia, the center of a modern off-shore industry turning low-grade scrap to Chinese import requirements.

US shipments to Malaysia increased from 120,000 tons in 2018 to 221,000 tons last year, according to estimates from the International Trade Centre. In 2015, the production volume to Malaysia was just 613 tonnes.

This is a redirection of low-grade content once bound for China or its back door in Hong Kong. Last year, exports from the United States to Malaysia had an total volume of 31 per cent, smaller than any other top-10 export destination. Malaysian processors disassemble and clean this content before purifying it into a type of copper that meets Beijing ‘s current “capital” threshold. The country emerged as the main supplier of copper scrap to China, accounting for 18 per cent of overall imports last year. The measured quality of the sample was a strong 89% value.

But it’s really a U.S. source in disguise. The world’s largest exporter is still exported to China, but now via Malaysia, due to Chinese scrap and trade policy.

The global supply system has shifted and is expected to significantly reduce the effect of the Beijing obligation waiver. Scrap is also the secret calming force of the copper market. 

During cycles of oversupply and low costs, the production of scrap decreases and the need for primary copper rises. Due to COVID-19, the price of copper in London fell from $6,343 a ton in January to $5,315.

It is a fairly fast decline to limit the production of waste. However, the coronavirus also accentuates the price effect as lockdowns freeze national collection networks and international trade flows. Just as China has reopened its doors to imports of copper waste, including some from the United States, it is likely to notice that there isn’t any.

They stated that scrap distance should take a while to tap in. Some Chinese smelters that might go for more copper concentrates. But right now, that’s not fast. Previous to COVID-19, the supply of concentrates was still increasing as modern Chinese smelters battled over raw materials with incumbents. The virus has caused disruption of supply , especially in key exporting countries such as Peru.

It ensures that the scrap deficit would result in higher demand for processed metal to account for the lack in domestic ‘internal’ supply and for a change in the material composition from producers utilizing both scrap and metal to produce goods.

Like usual with scrap, the balancing impact would be hard to see or measure, but Beijing ‘s latest policy reforms leave no question that China thinks it has to start plugging the void.

You may also like