Price: Rising copper price center widens refined-scrap copper price spread
China's refined copper prices rose then fell last week, with the overall price level moving higher. Although copper scrap prices followed the same trend, their gains were smaller than those of refined copper, so China's refined-scrap copper price spread widened last week. Looking ahead, with expectations of September's consumption improving but persistently tight spot supply, copper scrap prices are likely to remain firm, and the refined-scrap copper price spread is expected to narrow. Copper scrap invoice points were 13% in September, 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 slightly last week. Meanwhile, amid volatile domestic and overseas copper scrap prices, China's copper scrap import profit fluctuated sharply, ranging from -Yuan 1,383.93/tonne to Yuan 460.81/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. Therefore, China's copper scrap import volumes are expected to remain relatively high in the near term.
Data Source: Mysteel
Supply: Spot circulation improves slightly as price center shifts upward
China's copper scrap spot supply improved somewhat last week. Early in the week, scrap prices rose to highs along with copper prices, improving holders' margins on existing inventory and prompting holders to sell at high prices. However, upstream traders were reluctant to restock at those highs, leaving inventory limited and capping the overall improvement in spot circulation. As prices later fell, holders' profits on existing inventory narrowed, causing them to slow their selling. Looking ahead, given tax 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 supply.
Demand: Copper scrap trading shows limited improvement
China's copper scrap transactions saw only limited improvement last week. In the red copper scrap segment, high copper prices hampered downstream enterprises' sales of finished products. Coupled with the persist policy disruptions, most enterprises remained cautious in raw material procurement. In the brass scrap segment, overall end-user demand remained weak. Even though copper prices dropped sharply last Friday, end users remained largely wait-and-see, leading to limited order volumes received by downstream enterprises and making it difficult for raw material demand to improve significantly.
In previous years, when the peak season approached, processing enterprises would stock up in advance. This year, however, proactive restocking by downstream and end-use players has been slow to emerge. An even more critical signal is that even after copper scrap prices fell in some periods, downstream enterprises did not engage in large-scale buying. Instead, most scrap processors only procured based on rigid demand, keeping safety inventory to a minimum. This shows that after the sharp price fluctuations in the first half of the year, most downstream enterprises fear being stuck with inventory bought at high prices. They would rather take fewer orders and hold less inventory than bet on a peak-season price rally. And if downstream enterprises do not stock up, traders will find it hard to move their goods, leaving the market with only small, scattered transactions.
Looking ahead, although factors such as heightened macroeconomic disturbances, China's domestic industrial transformation, and diverging downstream demand may weaken the old seasonal patterns in the copper scrap market, expectations for improvement in peak-season consumption still remain, supported by industry resilience.
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
