BIR 2021: Malaysia to reject low-grade copper, aluminum scrap under proposed guideline

Major non-ferrous scrap products such as insulated copper wire (ICW) and zorba will not be able to enter Malaysia under a newly proposed import guideline, an industry body said at the Bureau of International Recycling (BIR) Convention 2021 on Wednesday June 2.

“Existing secondary investment will go down the drain if this guideline comes into force,” Eric Tan, president of the Malaysia Non-Ferrous Metals Association, said. “As you may know, plastic recycling capacity has been well established here for two years.”

The Southeast Asian country has been fighting in recent years to avoid becoming a dumping ground for scrap rejected by China and to move up the recycling value chain. In February this year, the Malaysian government proposed raising the import barriers for various kinds of scrap metal, including pre-shipment and on-port inspections, as well as imposing a stringent impurities threshold.

“We do not know why there is a need to have both inspections,” Tan said, adding that the double inspections proposed by Malaysia were not required by the Basel Convention on hazardous wastes.

In the case of copper scrap, the Malaysian government proposed a minimum copper content for scrap imports at 94.75%, meaning that ICW would not be allowed into Malaysia.

The new guideline, if applied, could disrupt the global flow of the copper scrap trade once more.

“We are still negotiating with the authorities and hope for a good outcome,” Tan said.

Since the beginning of 2019, a massive amount of low-grade copper scrap has been diverted to Malaysia since China banned the import of category-7 copper scrap. Malaysia also overtook China for the first time in 16 years to be the biggest importer of US copper scrap.

As a result, scrap dismantling plants have mushroomed across Malaysia over the past three years, to remove the plastic coatings from copper wire so it can then be processed into high-purity scrap eligible for shipment into China.

In the first quarter of this year, a total $235 million-worth of copper scrap was sold to Malaysia, up by 85% from $127 million a year earlier. The average three month price of copper on the London Metal Exchange rose by 50% year-on-year in the first quarter of this year.

Other than ICW, zorba is one of the most widely traded scrap products. It is the feedstock material for aluminium non-ferrous auto shred scrap, and is also likely to be banned from entering Malaysia under the new guideline, Tan said.

Zorba often comes with aluminium and copper dust, which are regarded as hazardous waste in the latest proposal. This means that Malaysian importers could only buy zorba with extremely clean surfaces.

“We have to ask exporters to rinse the zorba prior to exporting,” Tan said. “Do you think the exporters will do the washing for us?”

A total $204.8 million-worth of aluminium scrap was imported into Malaysia in the first three months of this year, official data showed, up by 76.8% year on year from $115.8 million. The LME three-month aluminium price rose by 22.6% year-on-year over the quarter.

Increasingly hostile treatment of scrap metal imports has already created concern among investors. In April this year, China’s Jiangxi Copper shelved its plan to build a copper facility in Malaysia with capacity for 150,000 tonnes per year, to process low-grade scrap including ICW.

Asian buyers’ continued shift toward high-purity copper scrap has substantially narrowed the discount between scrap and refined copper.

Fastmarkets has started a consultation for the possible introduction of a monthly assessment of the No1 copper material, RCu-2A,1B (candy/berry), cif China, LME/Comex discount, US cents per lb. This consultation will end on June 7.

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