On 23rd Dec’20, a notice on import tax adjustment for the year 2021 was published by the Ministry of Finance, Chinese govt has lowered conventional tariffs on scrap imports. In order to implement the law of the people’s Republic of China on the prevention and control of environmental pollution by solid wastes, the provisional import tax rate of solid wastes such as shredded metal wastes will be repealed.
On the other hand, conventional tax between China and countries such as New Zealand, Peru, Costa Rica, Switzerland, Iceland, Pakistan, Chile, Australia, South Korea, Georgia will see drop further as applicable from 01 Jan’21. This includes the continuous implementation of conventional rate for scraps under HS code 72041000 (crushed cast iron scraps); 72042100( crushed stainless steel scraps); 72042900 (other crushed alloy steel scraps), 72043000(crushed tin coated steel scraps), 72044100 (scraps from machining)-for Korea, this entry is at 0.6% from 0.8% in 2020, and 72044900 (other crushed steel scraps)
SteelMint learned that there is no import tax imposed on scraps from most countries as the provision import tax of 0% has been effective throughout 2020, regardless of the most favored national tax rate of 2% applicable on few grades of scrap. However, metal scrap falling under the HS code 7204100000(cast iron scraps), 7204300000 (tin coated steel scraps) and 7204410000( scraps from machining) will reimpose 2% as most favored national tax.
Will it impact the market ? Trade sources have highlighted SteelMint that recent revision in scrap import duty structure may not have a greater impact as the provision import tax of 0% has been effective throughout 2020. However with introduction of new standards, China is likely to see increase in scrap imports. This may result in lowering country’s iron ore imports.
China to implement new scrap import standards in CY’21- The new standards will support the rising demand for ferrous scrap in China and will introduce the nationwide classification and regulation of high-quality scrap, according to the China Metallurgical Information & Standardization Research Institute. Although the new set reforms will be implemented from 01 Jan’21, since most of the steel mills need time to identify suitable sources and unpredictability of the impact brought by COVID-19 overseas may consume 3-4 months to see actual impact of it.
Chinese buyers would likely to focus more on higher grade scrap grade such as PNS and Busheling. The gap between higher grade and lower grade scrap prices would likely increase. Hence, Japan may again turn a potential scrap supplier to China.
China imported around 0.02 mn t of ferrous scrap in CY’20 as against 2.32 mn t in CY’17. Japan occupied a share of 80% in China’s scrap imports in CY’17.
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