Chinese aluminum producer and Japanese trade sources said Monday trade of secondary aluminum ADC12 alloy, used for automotive components, has not been affected by China imposing a 25% tariff on US scrap imports into China. Major Chinese ADC12 producers will continue to import US scrap for processing trade operation, which is tariff-free in China, sources said.
China's processing trade system, designed to promote export of value added products, allows Chinese companies to import raw materials from overseas without any tax, as long as the raw material is processed in China and exported.
"There is no impact, nothing in the news about this system," a Chinese producer source said.
Major Chinese ADC12 producers have processing trade licenses, Japanese traders said.
Chinese producers were offering ADC12 alloys at $1,990-$2,000/mt CIF Japan for late April to May loading Monday, down $20-$30/mt from a week ago.
Spot weekly ADC12 export prices were assessed at $1,990-$2,010/mt FOB China on March 27, S&P Global Platts data showed.
There was no Chinese producer suggesting a hike in prices due to the possibility of higher feedstock costs, Japanese traders said. Rather, the producers were competing to make their sale on the back of high stocks, while overseas buyers waited for a further decline in prices.
One Japanese trader said China's 25% import tariff on US scrap will likely affect Chinese domestic ADC12 prices, as importers need to pass on higher scrap costs to local Chinese customers.
Platts assessed the weekly China domestic ADC12 price at Yuan 15,200-15,700/mt ex-works ($2,419-$2,499/mt) on March 27, the most recent assessment.
China's aluminum scrap imports were 190,000 mt in January, up 11% year on year, data from the country's General Administration of Customs showed.
In 2017, imports totaled 2.17 million mt.
