Price: Slower copper scrap price gains widen refined-scrap price spread
China's refined copper prices rose before falling last week, with the overall price level edging slightly higher week on week. Copper scrap prices tracked the movement of copper prices but posted a smaller gain than refined copper, causing China's refined-scrap copper price spread to widen last week.
Looking ahead, copper prices are expected to trend weak in the near term under macro pressures. Copper scrap prices are likely to retreat alongside copper, but the decline is expected to be smaller than that of refined copper. As a result, China's refined-scrap copper spread is expected to narrow in the near term.
Data Source: Mysteel
Supply: Rising copper scrap price slightly improves supply flow
China's copper scrap spot supply improved last week. For red copper scrap, surging copper prices early last week widened profit margins on upstream traders' inventories, encouraging active selling at elevated prices and boosting spot market liquidity. However, as copper prices retreated in the second half of the week, traders shifted focus to delivering previously booked orders, tightening available spot supply. For brass scrap, downstream brass processors' procurement interest remained low, and difficulties in collecting brass scrap weakened upstream traders' supply willingness, limiting the improvement in market circulation. Looking ahead, copper scrap prices are expected to decline alongside copper prices, shrinking upstream traders' profit margins and reducing their selling intent. In addition, difficulties in scrap collection and weak downstream procurement interest are also likely to restrain copper scrap circulation. As a result, the copper scrap spot market is expected to stay tight in the near term.
Demand: Widening refined-scrap price spread boosts downstream buying interest
China's copper scrap spot trading volumes posted a limited improvement last week. For red copper scrap, as the refined-scrap copper price spread widened, downstream procurement willingness strengthened, with buyers actively seeking deals at suitable prices. Combined with reasonably positive selling sentiment among upstream traders, overall market trading volumes improved, though spot material still flowed to regions with price advantages. For brass scrap, end-user procurement interest picked up after the decline in copper prices, but overall demand remained weak. Amid relatively intense market competition, most brass processors maintained low inventory levels and purchased mainly on a hand-to-mouth basis.
Looking ahead, trading activity in the copper scrap market is expected to remain divergent. With the refined-scrap copper price spread staying at a certain level, scrap-fed copper anode smelters will likely maintain strong operating rates and relatively steady procurement interest. In contrast, secondary copper processors in some markets are still affected by industry policy adjustments, and their production is expected to decline going forward, pulling down their demand for copper scrap.
Written by Zhaorui Cui, cuizhaorui@mysteel.com
Edited by Mingyuan Wang, wangmingyuan@mysteel.com
