metal

US and China metals scrap

Wastedive has reported that China is to add an extra 5% tariff to imports of selected metal imports, from December 2019. Included are certain scrap metals such as aluminium and copper. These metals already attract Chinese tariffs of up to 50%. The extra tariff may not be implemented; it forms part of the stand-off between the Chinese and US governments over trade, which may yet be resolved amicably. But even an extra 5% will make such trade in scrap metals less profitable than now.

Copper and aluminium are the two leading scrap metal export categories for US-China trade, so it isn’t hard to see why China has targeted these for additional tariffs. But the trade is already a declining one. The US sent US$6.2 billion worth of scrap copper and aluminium to China in 2011, but by 2018 this had fallen to less than US$1.8 billion. Existing tariffs have played their part in this, alongside a wider and ongoing tightening of China’s rules regarding permissible waste imports.

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As we have recently seen with plastics, a major and rapid shift is taking place. Only a few years ago, China was the leading destination for all kinds of waste from around the world, but no longer. As of 2020, the Chinese government has indicated that all solid waste imports will be banned. How this will work in practice is currently unknown, but it is certain that the existing trend will accelerate; alternative means of disposal will have to be found in the US and elsewhere for waste products, whose commodity value is falling due to oversupply.

One option is to find alternative export markets for scrap metals. Another is to develop domestic recycling capacity. This is tricky in a market where the value of the product is falling, but there is plenty of interest in the US in new recycling investment. The AcuComm database currently lists around 54 active metal recycling/processing projects in the US. These are worth around US$1.7 billion and come in various sizes. At the larger end of the scale is a proposed US$80 million scrap aluminium recycling plant in Wisconsin which gained planning permission in January 2019. This is due to begin operations towards the end of 2020. Far smaller in scale is a US$1.2 million investment by Nespresso to aid sorting and recycling of its aluminium coffee capsules in New York City. This is due to be operational by the end of 2019.

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