Supply chain issues hamper China’s COVID-19 recovery
Supply chain issues hamper China’s COVID-19 recovery
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China’s manufacturing recovery appears to be hampered by supply chain issues in the metals sector brought on by COVID-19 -related closures of mines in Peru, Chile and the Philippines.
Reuters’ London-based senior metals columnist Andy Home writes in a recent column, “China’s first-quarter trade figures capture these accumulating supply tensions, with import volumes of ores and concentrates dropping, and flows of scrap, an important part of the raw materials mix, drying up.”
While Home says the decrease in imports could be in part because the country’s metal companies built inventories when prices were low, constraints on imports of mined concentrates and scrap were at play in the copper sector.
“Concentrate imports fell by 1 percent in the first quarter, which was the first break of a strong uptrend running since early 2015,” Home notes. “China has built out a lot more smelter capacity in recent years, increasing its call on mined concentrates from countries such as Peru, where the lockdown has taken a heavy toll on mine operators.”
He writes that the issue has been compounded by a reduction in the flow of scrap over the last two years as the country’s central government has enacted purity requirements for these imports. Home notes that the pending reclassification of higher quality scrap, which will not be subject to import quotas, promises to boost imports significantly.
This reclassification is planned for July 1, though Adina Renee Adler, assistant vice president of international affairs with the Institute of Scrap Recycling Industries (ISRI), Washington, says the harmonized tariff codes under which these materials will be imported have not yet been determined.
Adler adds that demand for copper and aluminum scrap has increased in China, which has led to larger import quotas being issued in the last month.
Additionally, China has exempted tariffs on scrap imports from the United States. The policy is designed to help Chinese scrap metal consumers that have been challenged by the slowdown in economic activity in that country related to the coronavirus pandemic.
Despite these moves on China’s part, Home writes that “locked-down scrap collection chains in supplier countries are now restricting shipments” to the country. China’s imports of copper scrap declined by 39 percent in the first quarter to 210,000 metric tons, he adds.
ISRI Chief Economist/Director of Commodities Joe Pickard says China’s domestic collection of scrap is down considerably because of the country’s earlier COVID-19 lockdown. He adds that this could indicate improved Chinese scrap demand in the short term coupled with the supply disruptions globally from mining closures.
Other countries’ ability to meet this demand will be affected by the extent of their lockdowns.
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Source: Recycling Today
Supply chain issues hamper China’s COVID-19 recovery
<![CDATA[China’s manufacturing recovery appears to be hampered by supply chain issues in the metals sector brought on by COVID-19 -related closures of mines in Peru, Chile and the Philippines.Reuters’ London-based senior metals columnist Andy Home writes in a recent column, “China’s first-quarter trade figures capture these accumulating supply tensions, with import volumes of ores and concentrates dropping, and flows of scrap, an important part of the raw materials mix, drying up.”While Home says the decrease in imports could be in part because the country’s metal companies built inventories when prices were low, constraints on imports of mined concentrates and scrap were at play in the copper sector. “Concentrate imports fell by 1 percent in the first quarter, which was the first break of a strong uptrend running since early 2015,” Home notes. “China has built out a lot more smelter capacity in recent years, increasing its call on mined concentrates from countries such as Peru, where the lockdown has taken a heavy toll on mine operators.”He writes that the issue has been compounded by a reduction in the flow of scrap over the last two years as the country’s central government has enacted purity requirements for these imports. Home notes…