Price: Rising copper prices widen refined-scrap price spread
Refined copper prices in China shifted higher last week. Copper scrap prices followed the uptrend, but gains lagged behind those of refined copper due to weak market fundamentals, causing the refined-scrap copper price spread to widen last week. Looking ahead, copper prices are expected to fluctuate at relatively high levels in the short term, so China's refined-scrap copper spread is likely to stay around current levels, with limited room for a significant pullback.
Data Source: Mysteel
Supply: Low trade margins weaken copper scrap supply
Spot supply in China's copper scrap market saw limited improvement last week. For red copper scrap, market activity was subdued. Upstream holders were cautious, showing little buying interest and mostly selling into price rallies to reduce inventory ahead of the Dragon Boat Festival holiday. As a result, although spot supply increased, trading volumes remained relatively limited and prices were generally high. For brass scrap, sharp price swings coupled with tight availability drove higher prices from sellers, prompting upstream traders to stay cautious in both buying and selling. In addition, downstream enterprises' growing demand for VAT-invoiced copper scrap further dampened upstream sellers' willingness to sell. Overall, spot supply in the copper scrap market remained tight. Looking ahead, spot supply is expected to remain difficult to improve significantly in the short term. Elevated copper scrap collection prices and low bids from downstream enterprises will squeeze holders' trading margins, leaving selling interest weak.
Demand: Moderate finished product order growth limits copper scrap demand
Spot trading volumes in China's copper scrap market declined week on week last week. For red copper scrap, as the market entered the consumption off-season, downstream enterprises saw lackluster orders for finished products, mainly consuming existing raw material inventory recently and showing subdued restocking interest even ahead of the Dragon Boat Festival. Meanwhile, some enterprises were disrupted by invoice-related risks, further shrinking their raw material demand. For brass scrap, end-use consumption remained sluggish, leaving most brass processors with limited new orders. Most processors concentrated on fulfilling existing orders and purchased copper scrap only to cover rigid requirements, seeking to avoid the risk of raw material inventory accumulation. Looking ahead, given weak end-use consumption in the near term, copper scrap demand from both scrap-based anode producers and secondary copper processors is expected to remain limited.
Written by Zhaorui Cui, cuizhaorui@mysteel.com
Edited by Mingyuan Wang, wangmingyuan@mysteel.com
