China Drives Out Copper Processors

China’s clampdown on copper imports is driving processors to other Asian countries.

Exports could follow.

Suppliers and processors of scrap copper have sought opportunities elsewhere since China lowered the permissible contaminant threshold for copper imports to 1 percent.

Seeking to protect its environment and improve its domestic recycling efforts, China tightened restrictions on plastic, paper and copper imports as of Jan. 1. In addition to negatively impacting recyclers in the US and other nations that relied on exporting materials to China, companies inside of China that were dependent on purchasing, refining, and selling the scrap materials that were imported have been affected as well.

China has relied on imports to meet around half of its demand for copper, Reuters reported in an article on how companies are looking to process copper abroad. China uses copper for conductivity in the electronics that it produces.

Given that China shut down all processing plants that dealt below a certain threshold of pounds, the leaders of those companies are working towards moving their businesses. Many of them have already moved or are planning to move their companies to Southeast Asian countries.

Their goals are to intake as much of the excess scrap materials as possible, refine them, and then sell them to China. This is essentially what they were doing before but now they are required to ship from a separate country.

The movement of copper processors from China helps recyclers in the US because it provides a pathway for them to still export materials, even though the process will take longer. Large and small companies are using this opportunity to continue to operate their business and still have relations with China.

The current downside is that the market for copper was already growing in Southeast Asia. Even together, the potential scrap-processing destinations for the diverted copper, like Vietnam, Indonesia, Myanmar, Laos, and India, may lack the combined capacity of China.

Also, some companies are hesitating to invest in other countries in fear that China could backpedal on its tighter restrictions on imports, thereby rendering as useless any processing location elsewhere in Asia.

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