The Chinese government announced that there will be reductions in import tariffs on certain recycled copper and aluminium raw materials, effective as of 1 January 2025.

The goal of lowering import tariffs on recycled copper and aluminium is to encourage a greater influx of high-quality products while also stimulating domestic demand. These measures aim to support efforts toward low-carbon development.

According to the Chinese Ministry of Finance, import duties on refined copper will be cut from 2% to 0%, and those on scrap copper from 1.5% to 0%.  The move aims to alleviate pressure on Chinese smelters, who have had to accept significant reductions in annual TC/RC contract terms due to the tight concentrate market. Where possible, smelters have increasingly turned to alternative raw materials, such as anode, blister, and scrap, to replace concentrate feed. The tariff cuts are expected to marginally improve the profitability of importing scrap for this purpose.  Chinese scrap imports are estimated to have increased by 13.8% to 2.26Mt in gross weight in 2024, with the USA, Japan, Malaysia and Thailand being the largest sources of copper scrap for China.

This measure aligns with China’s long-term strategy to rely on recycled copper to meet domestic demand, as the copper concentrate market is expected to remain tight. New smelter capacities in regions outside China, such as Indonesia, India, and the DRC, along with Latin America’s production constraints due to lower grades, underinvestment, and regulatory challenges, contribute to this tightness. The usage of higher quality copper scrap helps to streamline the refining process. China imports most of its copper scrap from the USA, and the tariff reduction may also be viewed as a precautionary move ahead of potential trade frictions in 2025.

The new import tariffs will also significantly impact aluminium output, as China dominates supply of both primary and secondary (recycled) aluminium. An increase in incoming secondary aluminium could boost supplies amidst the 45Mtpy production capacity caps imposed on primary aluminium by the National Development and Reform Commission (NDRC). These lower tariffs may also soften geopolitical tensions and diversify global trade, allowing China to lessen its import dependency on specific suppliers. In 2024, China's trade relationships for recycled aluminium were mainly concentrated in the Asian market, with imports originating from Thailand (17%), Malaysia (12%), and Japan (11%). Changes to import duties may reshape the existing trade dynamics in this industry.

Furthermore, by increasing the variety of its recycled aluminium supply sources, China could better align to the targets set under dual control energy intensity policy which include peak carbon emissions by 2030 and achieving carbon neutrality by 2060. These measures would also indirectly incentivise other suppliers to upgrade their aluminium recycling capabilities to feed into the supply opportunity.