China said late Thursday it has stopped pre-certification of US scrap cargos and will inspect every single shipment of US scrap entering the country. The move came as a senior US trade delegation came to China to negotiate a reduction in the US trade deficit, apparently with little success, Kallanish notes.

Starting 4 May and lasting until 4 June 2018, “China port will empty each and every container of scrap material originated from the United States of America,” according to a notice from the North American arm of the China Certification and Inspection Group seen by Kallanish. The notice covers all types of scrap but for metal scrap it highlighted that it would check for the presence of powdery substances. The body also said it had suspended processing applications or issuing certificates for pre-shipment inspection of scrap cargos.

The tight Chinese scrap market has led to increased interest in imports from the US. In he first quarter of 2018, Chinese imports of US scrap were up 31.4% year-on-year to 132,293 tonnes. Shagang even resumed some bulk buying, ordering some 70,000t of US scrap in March. It is not yet clear whether this will be impacted by the restrictions.

At the same time on Friday, US and Chinese trade negotiators were meeting in Beijing. A leaked draft of demand from the US delegation included a demand that China reduce its trade surplus with the US by at least $200 billion relative to 2018 levels,  including by increasing purchases of US goods by at least $100 billion in the twelve months starting June 2018. Analysts meanwhile note that China is asking for the US to recognise it as a market economy in return, and has threatened to stop recognising the US as a market economy. It also wants the US to allow its companies, including ZTE, to make major investments in the USA.

With neither party expected to agree to each other’s demands, trade flows such as steel, ferrous and other scrap and agricultural products could continue to be caught up in sudden politically-motivated disruption from both sides. Reports over the weekend suggest that neither side made significant concession at the talks.