Aluminium scrap supply to tighten in 2018 on new import policies and environmental checks

According to an SMM report, aluminium scrap supply would stay tight in 2018 as environmental protection policies weigh in further in the coming year. SMM believes supply tightness would be mostly felt around Chinese New Year and the fourth quarter when demand is at its peak.

Secondary aluminium producers have started restocking ahead of the Chinese New Year holiday. Despite that their inventory levels are still low. According to SMM sources the secondary smelter stocks could last just seven to 10 days of production.

The tightening supply of aluminium scrap is attributed to environmental protection measures and policy changes on imported materials. China’s open-door policy on U.S. recycled material has ended in 2017 and they have already turned down mixed recyclables shipped from the U.S.

Air pollution measures had an impact on the metal as well as scrap and construction sector. Construction activities slowed down because of the environmental checks. That lead to the reduction of metal scrap accumulated from dismantling and construction.  

The tightness in scrap market was also caused by crackdown on agents for imported aluminium scrap, specifications on increasing metal content in imported scrap material and ban on imported aluminium scrap in category seven.