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Market News >> Shrinking supplies, weak consumption to keep aluminium scrap market balanced in Q4
 SHANGHAI, Nov 5 (SMM) – Short supplies of invoiced domestic resources and small inflows of seaborne resources are keeping China's aluminium scrap market balanced currently, SMM believes. Overall invoiced supplies remain tight and downstream automobile consumption remain sluggish.

Without a sound tax policy to regulate post-consumer aluminium scrap across Chinese markets, invoiced resources continue to be short. Imports of aluminium scrap stayed at low levels as China introduced new impurity thresholds on imported waste and tariffs of 25% on aluminium scrap from the US.

After the tariff took effect from April 2, about 700,000 mt of US aluminium scrap entered Chinese markets through the end of September, 34% lower than the same period last year, according to data from China Customs.

The new impurity thresholds on imported waste also kept scrap from old cars from entering China without being processed.

A trader who imported aluminium scrap from the Middle East told SMM that he has not received approval to import aluminium scrap after he filed an application in May. This suggested the government's tightening grip over imports.

Secondary aluminium producers held back from stockpiling large amounts of aluminium scrap as feedstock, given lacklustre consumption across the automobile sector and weak aluminium prices.

Data from the China Association of Automobile Manufacturers (CAAM) showed that production and sales of automobiles in September both stood some 11.6% lower than September 2017.

SMM expects such the balance in aluminium scrap markets to carry over through the fourth quarter of 2018. With stricter limitations on imports, supplies of invoiced aluminium scrap are expected to tighten before a tax policy is issued. Market pessimism on consumption across the automobile sector would sideline secondary aluminium producers.

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