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Recent Analysis of the Platinum Group Metals Market Situation in China
Release time:
11 Apr,2022
With the implementation of certain environmental and tax policies related to the precious metal recycling industry, as well as changes in supply and demand relationships and international situations, there has been a certain impact on the domestic precious metal recycling and utilization market and application market.
—— Secretary General of the Precious Metals Professional Committee of the China Material Recycling Association, Bian Jiang
With the implementation of some environmental and tax policies related to the precious metals recycling industry, as well as changes in supply and demand relationships and international situations, there has been a certain impact on the domestic precious metals recycling and utilization market and application market.
Recently, the person in charge of the Precious Metals Industry Committee of the China Material Recycling Association held talks with the heads of member enterprises in Beijing, and communicated with the heads of domestic and foreign vice president units and major member units via telephone or video, analyzing the current situation and circumstances of the industry.
1. Hazardous Waste Transfer
The new "Hazardous Waste Transfer Management Measures" remains one of the main factors restricting the recycling market. In this regard, at the end of March, the drafting group of the hazardous waste transfer management measures provided explanations for some provisions in the measures:
Article 3 of the "Measures" clarifies the specific meaning of the principle of proximity, which states that "the transfer of hazardous waste should follow the principle of proximity. For the transfer (hereinafter referred to as inter-provincial transfer) of hazardous waste across provinces, autonomous regions, and municipalities directly under the central government, it should primarily be to hazardous waste disposal facilities in neighboring provinces, autonomous regions, and municipalities that engage in regional cooperation, as well as nationally coordinated hazardous waste disposal facilities."
The principle of proximity for hazardous waste transfer does not mean an unconditional, "one-size-fits-all" determination of whether hazardous waste can be transferred based on distance. It should not be directly used as a restrictive condition for the approval of inter-provincial hazardous waste transfer. The implementation of the principle of proximity needs to comprehensively consider factors such as whether environmental risks are controllable, whether utilization and disposal capacities match, and whether technology and prices are reasonable, and should be distinguished from the perspectives of utilization and disposal based on the principles of "reduction, resource utilization, and harmlessness."
In terms of utilization, hazardous waste transfer is primarily market-oriented. Under the premise of meeting national and local relevant laws and regulations and environmental protection standards, no restrictive administrative barriers should be set for the transfer of hazardous waste for utilization purposes. (Including hazardous waste containing precious metals belongs to the category of utilization).
2. New VAT Policy for Comprehensive Resource Utilization
On March 1 of this year, the "Ministry of Finance and State Administration of Taxation on Improving the VAT Policy for Comprehensive Resource Utilization" was officially implemented. The original intention was to solve the issue of input invoices for recycled social source waste, but there are different understandings among local tax authorities and related enterprises regarding invoicing for precious metal waste recycling.
The policy interpretation by the Ministry of Finance and the State Administration of Taxation has, to some extent, helped enterprises correctly understand the implementation methods of the new policy, but various problems have arisen in the actual operation of enterprises. Taking the recycling of waste three-way catalytic converters as an example, the source recyclers are unwilling to issue a 3% VAT invoice, and intermediate recyclers and recycling refining enterprises cannot offset the input tax through legitimate channels. Moreover, the value of waste three-way catalytic converters is high, with each batch of waste materials worth at least three to five million, and up to over one hundred million. According to current policy regulations, invoicing is difficult. This has led to a slowdown in the recycling of waste three-way catalytic converters in a short period, with most enterprises remaining cautious during coordination.
3. Recycling Market
The recycling and utilization market for industrial waste catalysts and materials containing precious metals is relatively stable, with only a few acquisitions temporarily halted due to epidemic prevention and control, while most operations are normal.
The recycling market for waste three-way catalytic converters is extremely competitive due to the high prices of platinum group metals. Most scrapping automobile dismantling plants have significantly reduced the proportion of scrapped cars containing three-way catalytic converters, which has dropped to less than 7% of the scrapped cars they recycle. Due to market competition, the metal discount rate for recycling waste three-way catalytic converters has risen sharply, from 80% in 2018 to 83% in 2019, reaching 95% by the end of 2021, and even 97% has appeared. Over four years, the cost of recycling waste three-way catalytic converters has increased tenfold. Considering the recycling rate and production operating costs, recycling refining enterprises are basically unprofitable. The high discount rate and the increase in domestic waste three-way recycling refining enterprises' production capacity have significantly reduced the export of waste three-way catalytic converters, with the vast majority remaining within China.
Market competition still needs to be regulated by the market. In the short term, there will be no administrative intervention in the waste three-way catalytic converter recycling market. It is believed that in two years, the waste three-way catalytic converter recycling market will stabilize and standardize.
4. Supply and Demand Relationship
Currently, the supply and demand for platinum group metals in China are balanced. Changes in the international situation have led to a slowdown in the import of platinum group metals, but due to epidemic control, the demand in major application areas for platinum group metals has also slowed down. Comprehensive petrochemical and fine chemical enterprises have extended the failure cycle of waste catalysts. The rapid growth of new energy vehicles, along with factors such as chip shortages and epidemic control reducing production capacity in important automobile production areas like Changchun and Shanghai, has led to a decrease in the current demand for platinum group metals.
Through research on member enterprises engaged in recycling and refining, the amount of platinum group metals recycled within China can meet the demand in application areas. Under the condition of supply and demand balance, the price of platinum group metals will not fluctuate significantly except for short-term speculation.
China's goals for carbon peak and carbon neutrality cannot be separated from platinum group metal materials. Strict automobile exhaust emission standards will require a large amount of palladium and rhodium, and the national hydrogen energy plan will further increase the application of platinum and iridium. In the field of industrial catalysis, reducing consumption and increasing production will also significantly enhance the usage of platinum group metals. In the long term, we are optimistic about the increase in China's platinum group metal recycling market and application areas, and the supply and demand structure will not undergo significant changes.
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