China's Aluminium Scrap Imports Expected to Climb as Import Curbs Ease

China's Aluminium Scrap

China's aluminium scrap imports are poised for a significant rise after the country announced the easing of import restrictions, effective November 15. The revised regulations include the addition of secondary high-purity aluminium and secondary deformed aluminium alloys to the list of approved imports, alongside secondary wrought aluminium alloys, which were authorized in 2020. These developments reflect China's strategic shift toward mitigating domestic aluminium scrap shortages and optimizing resource utilization.

Policy Easing and Its Implications

The new policy, announced in an official notice on October 23, sets stringent standards for imported scrap: a minimum aluminium content of 91% and a maximum impurity limit of 0.8%. Market participants believe this regulatory change could encourage smelters to increase their reliance on aluminium scrap feedstock, thereby lowering raw material costs amid persistent domestic shortages.

Challenges from Negative Import Arbitrage

Despite the optimistic outlook, China's aluminium import arbitrage has been predominantly negative since April. High import prices, tied to primary aluminium price negotiations, have dampened traders' enthusiasm. However, the introduction of this policy has generated renewed interest in the scrap market. A scrap trader noted that while current price pressures persist, the policy shift has ignited buying interest.

Recent Import Trends and Market Dynamics

From January to September, China imported 135.2 million tonnes of aluminium scrap, marking a 6.7% year-on-year increase, according to customs data. Meanwhile, domestic alumina prices have surged in recent months due to tight bauxite supplies and robust demand from aluminium producers. This price environment underscores the importance of cost-effective scrap imports to support the country’s aluminium industry.

With these policy adjustments, China aims to address supply shortages, stabilize aluminium markets, and ensure a more sustainable approach to raw material sourcing. However, market dynamics, particularly import pricing and arbitrage conditions, will play a critical role in determining the full impact of this regulatory shift.