China’s Recycle copper Industry Holds Broad Prospects

According to China Aluminum Industry Report, in recent years China has introduced a host of incentive policies for solid waste recycling, which is part of the circular economy. On October 31, 2011, the General Office of the State Council released the “Opinions on the Establishment of a Complete and Advanced Waste Products Recycling System”. It was put forward that in 2015 a state-of-the-art waste goods recycling system featuring a sound network, advanced technology, efficient sorting,and standard management will take shape, with the recovery rate of main types of waste goods reaching 70%. Meanwhile, the Chinese Academy for Environmental Planning under the Ministry of Environmental Protection, during the 12th Five-Year Plan period, investment in the solid waste disposal industry will hit 800 billion yuan, quadrupling the figure of the 11th Five-Year Plan period. In such a context, we analyzed imported copper scrap, which is one of the main sources of the raw materials of copper smelting in China, and the present situation and future trend of the copper scrap recovery and dismantling market.

Renewable resources refer to various kinds of unusable materials that are generated in the production, distribution and consumption processes, and exist in various forms, but can be reused after being processed in various ways. The renewable resources industry is an extremely crucial part of the circular economy,covering two major fields of reutilization and resource recovery. To cope with the gradual depletion of natural resources, it is highly necessary and urgent to develop the renewable resources industry. It facilitates resolving the conflict between China’s economic development and resource constraints, environmental protection and upgrade of industrial structure.As an emerging “old industry”, the renewable resources industry holds broad prospects in the era of energy conservation and circular economy.

Currently, main problem faced by China’s scrap nonferrous metals recycling industry is low industry concentration. In 2007 alone,there were more than 5,000 enterprises of all sizes dedicated to nonferrous metals recycling in this country. With few leading enterprises,the industry urgently needs consolidation. With outdated equipment and backward processing technology, most enterprises are not well positioned to control secondary pollution. In addition, China’s scrap metals recycling industry suffers from overcapacity. At present, each year China imports about 7 million tons of scrap nonferrous metals, and some 2 million tons are recycled at home. However, currently,there is a total of 20 million tons of production capacities in operation and under construction.Obviously, there is a significant excess of capacity. Although there are many problems, in recent years as China works hard to develop circular economy, the nonferrous metals recycling industry has made remarkable progress.

As Chinese smelting enterprises and processing enterprises keep growing in size, demand for raw materials is increasing, and the contradiction between supply and demand is intensifying. For example, a smelter under Jiangxi Copper Group produces 1 million tons of copper cathode plate annually, which consumes 160,000 tons of its own ore, 340,000 tons of imported ore, and 500,000 tons of copper scrap.Thus, as domestic smelting enterprises’ production capacity expands rapidly and ore raw materials are in short supply, smelters increasingly rely on copper scrap as raw material.

From 2011 to the end of the 12th Five-Year Plan period, there will be an increase of 7.5 million tons in the production capacity of copper smelting and deep processing. In the future,demand for copper raw materials will grow in China leading to a more serious imbalance between supply and demand. In 2012, refined copper production capacity will grow by 1.9 million tons, equivalent to total imports of copper scrap in 2010. Copper scrap will be used as raw material for more than half of the increased production capacity.

In addition, in recent years, copper processing enterprises, which are facing fierce industry competition, have had their profit further eroded by soaring prices of refined copper.Many processing enterprises started to consider using copper scrap to cut back on the cost of raw materials. At the same time, production capacity of copper processing will grow by around 2 million tons next year. This proportion of production capacity will require a considerable quantity of high-grade copper scrap.Consequently, competition for high-grade copper scrap will be fiercer.

At present, the quantity of recycled copper scrap in China falls much short of industrial demand. By comparing copper scrap imports to domestic recycled quantity in the past few years, we can see that, even though imported copper scrap only has a 30% grade, the quantity of copper scrap recycled at home is merely one third of imports. China Nonferrous Metals Association Recycling Metal Branch estimates that from 2014 on copper scrap recycling will gradually get into a peak period in China, but in the short term it will be very difficult to reverse the dominance of imports in copper scrap supply.

Currently, about two thirds of demand for copper scrap is met by imports. An important question is whether a drastic increase in the domestic output of copper scrap will throw the copper market off balance and replace demand for copper concentrate and intermediate products.Despite the fast growth of copper scrap reserves, the long service life of copper (30 years on average) means that for some time to come most demand in China will still be met by imports. We predict that the growth of China’s copper scrap output will take a gradual process.Therefore, the heavy dependence on imported copper scrap will continue for quite a long time.