Price: Lower copper price narrows refined-scrap spread
China's refined copper prices shifted lower last week. Meanwhile, copper scrap prices remained firm amid tight supply of invoice-bearing scrap, narrowing the refined-scrap copper price spread last week. Looking ahead, copper prices are expected to remain elevated in the near term, and copper scrap prices are likely to track copper price movements. Therefore, the refined-scrap copper price spread is expected to remain near current levels with limited movement. Copper scrap invoice points were close to 13% last week, significantly increasing scrap costs, making it difficult to continue using the refined-scrap copper price spread as an indicator of substitution between refined copper and copper scrap in actual transactions.
Data Source: Mysteel
The weekly average import prices for red copper scrap (99%-99.5% Cu) in China increased last week, mainly because the market's reliance on imported copper scrap increased. Meanwhile, as domestic and overseas copper scrap prices fluctuated, China's copper scrap import trade turned from losses to profits, ranging from -Yuan 272.37/tonne to Yuan 672.98/tonne. Looking ahead, the impact of tax policy tightening on China's copper scrap industry is unlikely to be resolved soon, and demand for imported copper scrap is expected to remain strong in August. According to market research, despite sharply rising copper prices, the domestic sales deduction for imported bare bright copper remained basically within Yuan 2,000/tonne with limited fluctuations, leading to high market acceptance of imported copper scrap. Therefore, China's copper scrap import volumes are expected to remain relatively high in the near term.
Supply: Copper scrap spot supply improves on price rally
China's copper scrap supply improved slightly last week. For red copper scrap, during the price uptrend early last week, upstream traders actively sold and increased spot market circulation. However, after copper prices pulled back, trading sentiment quickly cooled and spot supply tightened noticeably. For brass scrap, holders' profit margins widened early in the week, and many actively sold at high prices, but actual sales fell short of expectations due to weak downstream demand. After prices weakened subsequently, trading margins narrowed and spot circulation also slowed. Looking ahead, copper prices are expected to remain volatile at high levels in the near term, which should encourage upstream copper scrap holders to sell. However, given policy uncertainty and weak downstream demand, spot supply is unlikely to improve significantly, and the overall market is expected to remain characterized by high prices and limited trading.
Demand: Spot trade volume rises WoW
China's copper scrap spot trading volumes edged up slightly week on week last week. For red copper scrap, downstream processors held limited raw material inventories, with restocking willingness improving. However, with month-end approaching, invoice quota were tight, so some enterprises prioritized purchasing invoice-bearing copper scrap, causing market transactions to diverge significantly, and resources mostly flowed to a few producers with pricing advantages. For brass scrap, copper prices fluctuated sharply and market quotes were chaotic. End-user enterprises generally stayed cautious and made only moderate purchases to meet rigid demand. Against this backdrop, orders received by most downstream processors were lackluster, so their demand for brass scrap remained limited, with consumption mainly drawing down existent inventories.
Looking ahead, downstream consumption is unlikely to improve significantly in the near term. For copper anode producers using scrap, 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 copper scrap 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
