SCRAP metal importers in China expect disruptions in shipments to start this month because of uncertainty surrounding new scrap restrictions starting in July, depriving the world’s biggest copper consumer of a crucial source of the metal.

Starting on July 1, China will restrict high-grade Category 6 copper scrap, as well as aluminum and steel scrap, an extension of an earlier ban that started this year on Category 7 scrap, which has less metal content.

From then, scrap metal importers into China will have to show they have the capacity to manufacture the imported scrap into refined metal or semi-finished products such as copper cathode or rods in order to receive licenses and quotas from the Ministry of Ecology and Environment, according to sources familiar with the process.

China, the world’s biggest metals consumer, imported 5.34 million tons of scrap metal last year, down a third from 2017, according to customs data, as an environmental campaign against solid waste gained momentum.

On a copper contained basis, China’s scrap copper imports last year accounted for almost 10 percent of the country’s total copper consumption of 13.05 million tons, according to media calculations using data from Refinitiv, customs and China’s industry ministry.

Scrap professionals expect the Category 6 restrictions to cause further disruptions to trade flows and supply after the Sino-U.S. trade war saw Japan overtake the United States to become China’s biggest copper scrap supplier last year.

Chinese copper scrap importer HKM expects China’s scrap imports to fall by 40 percent to 50 percent in May and June. The company imports about 10,000 tons per month of copper scrap into China, using half of that at its own copper rod plant in Jiangxi Province.

Jiangxi Copper is planning a plant in Malaysia that will process scrap into refined copper, for possible onward shipment to China.(SD-Agencies)