Price: Higher copper price widens refined-scrap spread
China's refined copper prices shifted higher last week. Meanwhile, copper scrap prices also rose, but by less than refined copper, causing the refined-scrap copper price spread to widen slightly last week. Looking ahead, as macro factors weigh on copper prices, there is room for a pullback, so the refined-scrap copper price spread is likely to narrow this week. Copper scrap invoice points were close to 13% recently, 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.
The weekly average import prices for red copper scrap (99%-99.5% Cu) in China increased last week. Meanwhile, as domestic and overseas copper scrap prices fluctuated, China's copper scrap import profit decreased, ranging from -Yuan 852.17/tonne to Yuan 78.40/tonne. Looking ahead, the constraints of the reverse-invoicing policy on China's scrap sector will be hard to ease in the near term, and invoice shortages are likely to intensify, keeping demand for imported scrap strong. Meanwhile, according to market research, despite sharply fluctuating copper prices, the domestic sales deduction for imported bare bright copper remained basically within Yuan 2,000/tonne, 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.
Data Source: Mysteel
Supply: Copper scrap spot supply improves on price rally
With the rise in prices, spot availability of copper scrap in China improved last week. For red copper scrap, as profit margins on existing material widened, upstream traders became more willing to sell, improving spot availability. However, after sustained selling, traders' on-hand inventory was generally low, and their appetite to replenish scrap at current prices was weak, which caps further improvement in copper scrap circulation. For brass scrap, upstream holders showed greater willingness to sell, releasing some backlogged material, but due to higher purchase prices and insufficient traders' inventory, the improvement in spot supply was limited. Looking ahead, given policy uncertainty, copper scrap spot supply in China 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
Spot trading volume in China's copper scrap market rose last week, but trading activity was mixed. For red copper scrap, downstream producers saw improved margins on finished products, boosting their willingness to purchase raw materials, though supply flowed mainly to mills with more competitive quotes. In contrast, for brass scrap, firmer raw material prices weighed on end-user demand. Even as downstream producers lowered finished product prices, new orders remained limited. Looking ahead, near-term trading volumes are unlikely to see significant gains given high scrap prices, tight supply, and policy uncertainty. However, the upcoming traditional consumption peak-season may lift downstream order intake to some extent, supporting their essential copper scrap demand. That said, if the refined-scrap copper price spread continues to narrow and copper scrap loses its price advantage, some downstream producers may switch to refined copper.
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
