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Export tonnages dropped by 5.18% in 2023 compared with 2022, according to US International Trade Commission data.
Sources throughout the year cited lower but balanced levels of supply and demand, as well as slowed export activity, but discount levels remained largely steady regardless of activity levels and despite fluctuating COMEX levels.
While in the first half of 2023 sources pointed to low demand in China as a contributing factor to lower export numbers, exports to China increased by 12.32% to 360,938 tons compared with 321,348 tons in 2022. US copper scrap exports to China have also continually increased since 2019, with 2023 exports increasing by 272.42% from 2019 levels.
Imports to Malaysia also rose by 8.56% in 2023 compared with 2022, with the country receiving 79,266 tons of US copper scrap in 2023.
But these increases were not enough to offset decreases in other countries including Canada (down by 11.40% from 2022), India (down by 14.21%), Japan (down by 23.07%) and South Korea (down by 26.08%).
Joe Pickard, Institute of Scrap Recycling Industries (ISRI) chief economist and director of commodities, spoke on slowed flows of recycled materials as a whole during the global markets and trade roundtable at the ISRI Roundtables in September.
“India… has become one of the fastest growing export markets for us for our recycled materials,” Pickard said, but added that US shipments to India have declined overall year on year.
“China, which a lot of market participants have completely written off as being out of the market or no longer a major driver of recycled material trade flows, is actually the third largest export market for US recyclables by dollar terms,” he added. “But again, Chinese demand [is] down.”
“The expectation is for continued moderate growth in the US and for most of the regions around the world, which has a direct impact on how much material we’re shipping overseas, as overall economic growth and manufacturing output globally has been slowing,” Pickard said.
“Here in the United States, the International Monetary Fund is only projecting about 1% growth next year,” Pickard said. “But if we look at other markets around the world where we’re already seeing increased demand for recyclables – including India, Thailand and some of the other Southeastern Asian markets – emerging and developing Asia is supposed to be… the fastest growing region of the world economically.”
“So those types of growth figures actually bode well for overseas demand for recyclables in those regions. But again, globally, we’re looking at slow to moderate growth this year and next,” he added.
China held the largest market share of US copper scrap exports by a wide margin in 2023, taking in 37.20%, outpacing the second highest importer of US scrap by nearly 27%.
That share has jumped considerably from 2019, when the country held 10.07%.
When we talk about copper, we can’t avoid talking about China,” Sebastien Perron, vice president of recycling procurement at Wieland North America Recycling said at the ISRI Roundtables. “China’s position on importing copper is really challenging prices and kind of setting the stage.”
But, Perron continued, “China is unpredictable on how they take recycled materials and the regulations they issue.”
Josephita Harry, vice president of sales in the non-ferrous and electronics scrap division of Pan American Zinc, said at the ISRI Roundtables that “China’s had a lot of geopolitical tensions” and “not the greatest relationships with Europe or with the US.”
But “despite all this, there’s still a lot of demand. It just seems like it’s a lot less than before, but the demand continues,” she added.
Harry also noted that “we may not see all imports going to China directly because of the trade restrictions,” and they may find their way to other countries in the region first to “get further processed… and then it finds their way to China.”
Copper trade flows from the US to China slowed considerably in 2019, following a series of policy changes starting in 2018, when China’s State Council announced it was working towards a complete ban on imports of solid waste – including all metal scrap – by the end of 2020.
But in 2020, the Chinese Ministry of Ecology and Environment announced that recycled copper and aluminium that met the country’s standards for renewable metals instead of solid waste could be freely imported into the country beginning in November of that year.
Changes to the policy that took effect in November 2020 included re-labeling several grades of copper and aluminium scrap from “waste” to a recyclable resource, as well as dropping requirements for mandatory China Certification and Inspection Group inspection processes.
In November 2022, the top ten copper producers in China then sought to convince their government to relax scrap import standards, pledging to have recycled copper make up 25% of their total production by 2025, according to a joint statement by the ten producers.
The easing of the restrictions has allowed for trade flows to rebound. In 2023, China imported 1.99 million tonnes of copper scrap globally, up by 12.1% from 2022.
“There is still a shortage of material available globally, which is why [scrap] prices remain very strong. Demand is still there so whenever we have material, we can sell easily,” a scrap supplier told Fastmarkets in November 2023, referring to the Chinese market.
But market participants have continually expressed concern about the reliance of copper exports in the US market.
At the ISRI National Convention in April 2023, speakers at the Spotlight on Copper panel repeatedly noted that the US was currently losing half of the copper scrap it generates – around 2 million tons per year – to export, despite the need to ensure a pipeline of critical materials domestically.
“The United States is the largest exporter of copper scrap,” John Gross, publisher of The Copper Journal, said. “That [material] should be staying here to make product in the US… This is the biggest problem that the US has had relative to consumption of scrap as well as producing refined material.”
“I’m not by any means demonizing the export market,” Matt Bedingfield, president of Wieland North America, said at the copper panel. “We did this as a country. We had the infrastructure in place [to produce domestically], and it went away. So, the metal flowed where the metal needed to flow.”
The conversation continued into the fall, when Ed Meir, senior commodity consultant at Marex, said: “What really worries me and does not get a lot of press is the geopolitical undercurrents” when considering these markets.
Meir discussed ongoing tensions with China, saying they are “certainly not helpful.”
“I think the geopolitics [are] going to be messy, and I think that’s going to inhibit growing very quickly like we were in say 2015, 16, 17, 18, when the whole world was actually growing in sync at a very strong pace,” Meir added.
Sources throughout the year noted price movement corresponding to rising or falling demand for exported material to China, especially red brass and yellow brass scrap, as well as copper scrap No2 copper.
“China alone is the big elephant in the room as far as copper is concerned, especially the real estate sector,” Meir said. “Just their property market alone consumes 20% of the world’s copper. That’s a massive amount.”
“My thinking is that eventually the EV demand will replace China as the main driver for copper consumption, but… I think the growth trajectory will be bumpy,” he continued.
But Meir added that copper is “in a way a good place to be” because, outside of EVs, there is also “going to be a big demand for grid spending and infrastructure spending.”
Similar to China, Malaysia enacted a 0% impurity scrap policy in 2022, which set even higher restrictions than those for China, Indonesia and other scrap-processing countries for major scrap import products.
Products included “ferrous waste and scrap; remelting scrap ingots of iron or steel” (HS Code 7204), copper waste and scrap (HS Code 7404) and “aluminium waste or scrap” (HS Code 7602).
The restrictions came in response to Malaysia receiving high quantities of lower-grade scrap cargoes that could not be delivered into China after China’s new rules came into effect.
Following the policy, exports of US copper scrap to Malaysia fell by 56.25% in 2022 compared with 2021. But levels began to increase in again in 2023, with the country taking in 79,626 tons of US copper scrap.
At the Materials Recycling Association of India (MRAI) conference in Bangkok in August, Eric Tan, president of the Malaysia Non-Ferrous Metals association, said that the country was hoping to reassert itself as a large importer of non-ferrous scrap.
“Between 2018 and 2022, there was a surge in scrap imports to Malaysia which meant big investments in the recycling sector,” Tan said. “Malaysia is [now] gearing up to [be one of the] major non-ferrous scrap importers in the world.”
But these efforts will face hurdles, not just because of import controls, but also due to the reemergence of China as a large market of US scrap.
“We have seen signs of China opening up [to non-ferrous scrap imports],” Tan said. “Two years ago, most copper No2 scrap you couldn’t send to China, while in the past year lots [has been] going to China.”
This resurgence is “not good” for Malaysia, Tan said, because the country is in direct competition with China for that material, which generally satisfies import requirements for both nations.
Increases to US processing capacity are also expected to decrease export numbers in the coming years.
Brad Miller, international trading manager of US-based recyclers David J. Joseph (DJJ), said at the MRAI conference that there is an increasing prevalence of US equipment that can process lower-grade scrap that was previously shipped in larger quantities to Asia for processing.
“Lower-grade copper recovery plants are coming in [to the US]. More scrap will stay at home and not be exported,” Miller said.
The comments echoed those in the US who have expressed the need to increase domestic processing capacity.
“The largest economy in the world cannot depend on imports for 50% of its [refined copper] requirements,” John Gross said at the ISRI National Convention.
“There’s actually a balance between the amount of copper that we’re bringing in in primary refined form and the amount of copper that we’re shipping offshore as scraps that we either can’t do anything with, that we don’t have the technology or the facilities to refine and put back into the market, or for other reasons it’s going offshore,” Andy Kireta, president and chief executive officer of the Copper Development Association, said at the ISRI Roundtables.
“There’s a lot of great news out there on where anticipated demand is expected to grow, mostly in the energy and electrical spaces,” Kireta said. “And the biggest question has been, where’s the supply going to come from?”
Sources throughout the year have agreed that material, especially copper, will see much larger demand at some point in the future with electrification efforts growing. But they continued to question when that demand would be seen.
“What we’re seeing on the market now is [original equipment manufacturers], fabricators and copper mining companies dealing with all of these different sustainability initiatives, and there’s no clarity of direction,” Kireta said.
The market is “impossible to forecast with constantly changing economic news,” one source said in April.
And for pricing copper in the meantime, as Ed Meir said in at the ISRI Roundtables, “your guess is as good as anyone’s.”
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