About two months after China announced the rules, some port customs have not yet used them, raising the risk for opaque procedures to delay copper scrap arrivals in August, when inflows are expected to surpass June's figure, and cut domestic supplies.
"Port customs seem to have different views on the new rules," said a manager at an importer of copper and aluminium scrap in the eastern province of Zhejiang, which asked overseas suppliers to put different types of copper scrap in separate containers.
Any falls in supply could fuel China's demand for refined copper, one of the main drivers of London Metal Exchange prices, as copper scrap is a substitute for refined metal at fabricating plants and for concentrate at smelters.
The new rules, posted on the customs website in April, (www.customs.gov.cn) and meant to apply from June 1, require mixed kinds of scrap metal in containers to be segregated by type, instead of loose bulk, as previously.
That requirement, as part of China's crackdown on tariff evasion, could raise costs for overseas suppliers by forcing them to add packaging equipment.
The new rules affect copper scrap imports the most as China has a copper deficit and some importers misreport the metal content of copper scrap to reduce duty payments under a 17 percent value-added tax.
But June's copper scrap imports did not fall due to the new rules, as many had expected. Imports rose 8 percent from May to 353,470 tons as some port customs did not use the new rules.
A trader for an European copper scrap supplier said the firm had been providing one type per container to Chinese buyers to meet the new rules.
But in the southern province of Guangdong, the biggest copper scrap import destination in China, most port customs have kept to the old procedure, importer sources said.
"Ours have remained the same as before," said a Guangdong scrap importer, describing customs processing of its imports.
Local customs officials told the firm they had not yet received the official notice from Beijing, so they had not followed the new rules, he said.
"We don't know when the new rules will be imposed," he said. "We would have to go to other ports if our future imports arrive in a port in which the new rules are used."
But more copper scrap imports are expected to arrive in China in August following a rise of spot bookings made in May and June because of weak LME metal prices, traders said.
Cash LME copper, the basis for spot copper scrap to China, has fallen from near $8,000 in April to below $7,000 in Asia.
"The ball is with the port customs. They can do it or not do it," a scrap specialist in Guangdong said. (Reuters)
