Price: Tax point increase narrows China's refined-scrap copper price spread
China's weekly average refined copper price fell last week, dragging tax-exclusive copper scrap prices lower. However, tax-inclusive copper scrap prices rose week on week due to a higher copper scrap tax point in July, narrowing the refined-scrap copper price spread. Looking ahead, with macro headwinds easing and China's refined copper retail inventory continuing to decline in the near term, refined copper prices are expected to remain firm. Copper scrap prices are also likely to rise, but the increase is expected to lag behind copper prices, which could slightly widen the refined-scrap copper price spread this week.
Data Source: Mysteel
Supply: Copper scrap spot supply remains tight amid weak profit
China's copper scrap supply tightness persisted last week. For red copper scrap, amid soft and volatile prices, some upstream holders actively sold down inventories on fears of further price declines, but most traders faced high procurement costs, leaving their available supply relatively limited. For brass scrap, lower prices squeezed holders' trading margins, while invoice issues added further selling disruptions, constraining spot market circulation.
Looking ahead, higher copper scrap tax points in the near term will push up holders' acquisition costs, yet downstream users are generally reluctant to accept high prices, so overall market trading willingness is expected to stay subdued. As a result, spot availability in China's copper scrap market is unlikely to improve materially in the near term.
Demand: Copper scrap trading volume improves only marginally in off-season
China's copper scrap market saw a slight week-on-week improvement in trading volumes last week. In the red copper scrap segment, the market is gradually entering the traditional off-season. Downstream capacity utilization rates remained low, and most active producers were consuming feedstock inventories while taking a wait-and-see stance under high prices. Though there is intermittent restocking demand, it is constrained by high spot prices and tight copper scrap supply, so the actual increase in transactions was modest. In the brass scrap segment, end-use consumption was hard to release against the seasonal slowdown. Downstream firms received limited new orders, which directly suppressed their appetite for raw material procurement. At the same time, a significant gap between market offers and buyers' price expectations made spot deals difficult to conclude.
Looking ahead, downstream consumption is unlikely to improve significantly in the near term. For copper anode producers using scrap, expectations of rising copper prices could improve margins and encourage higher output, but elevated copper scrap prices and tight availability are still expected to curb their copper scrap purchasing needs. As for secondary copper processors, weak order inflow from end-users during the off-season is likely to continue weighing on their raw material procurement.
More regular analysis and comprehensive data on China's copper industry are available in Mysteel Copper Weekly, Mysteel Copper Monthly, and Mysteel Copper Database. Reach out to us via Mysteel's official website: Latest & Reliable Copper Market Price in China | Mysteel, and follow Mysteel Non-Ferrous for more insights!
Written by Zhaorui Cui, cuizhaorui@mysteel.com
Edited by Mingyuan Wang, wangmingyuan@mysteel.com
