China’s New Scrap Import Rules and Export Tax Rebate Changes Shake Nonferrous Metals Market

China Eases Scrap Import Rules
In a significant move to boost its recycled metals industry, China recently announced new import regulations for nonferrous scrap metals. Effective from November 15, the rules, co-signed by six government agencies, simplify the inspection process for aluminum and copper scrap entering the country. Under the new guidelines, these materials will undergo visual inspections rather than more stringent testing, including radioactive contamination checks. This shift opens the door for a wider range of scrap types to enter the market, potentially including brass scrap and other copper alloys. These changes reflect China’s intent to better integrate nonferrous scrap into its economy and promote “high-quality development” of the recycled metals sector.

Previously, China’s inspection protocols for scrap metal were seen as unpredictable and complex, deterring international traders. However, the new rules signal a more welcoming stance towards nonferrous scrap, a move that is expected to drive increased imports of recycled metals, such as No. 2 copper, into China. The government has also stated that recyclable copper, aluminum, and alloys that meet the specified quality standards will no longer be considered “solid waste,” allowing these materials to be imported freely.

Tax Rebate Removal Puts Pressure on Aluminum and Copper Producers
In a related but separate policy development, China’s Ministry of Finance has announced the cancellation of export tax rebates for finished and semifinished aluminum products, as well as copper. This rebate had been a key financial incentive for aluminum producers, with some receiving up to 13% of the value of their exports. The tax rebate had been criticized for contributing to overcapacity in the aluminum sector, and its removal is seen as an effort to curb excessive production and reduce global market imbalances.

The immediate impact of this decision has been a rise in aluminum prices on the London Metal Exchange (LME), as traders anticipate a tightening of supply in China’s aluminum market. As China exported 5.2 million metric tons of semifinished aluminum in 2023—around 7% of global aluminum trade—the withdrawal of this rebate could lead to a shift in global trade dynamics. Industry analysts are speculating that the move may help level the playing field for non-Chinese aluminum producers, potentially leading to a more favorable market environment for them.

Broader Market Implications
These simultaneous policy changes could reshape the landscape of global nonferrous metal trade. While the easing of scrap import restrictions is expected to support China’s recycling sector, the removal of export rebates for aluminum and copper may reduce China’s influence over the global supply chain. The ripple effects of these decisions will be felt across markets, particularly in countries that depend on Chinese imports of semifinished aluminum and other nonferrous metals.