Price: Larger refined copper price gains widen refined-scrap price spread
China's refined copper price center moved higher last week, with copper scrap prices following. However, weak downstream demand for copper scrap kept its price gains smaller than refined copper, widening the refined-scrap copper price spread last week. Going forward, the impact of the reverse invoicing policy is expected to keep domestic copper scrap supply tight with little short-term improvement. With holders holding back sales to support prices, copper scrap prices are expected to remain firm. Meanwhile, 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 last week. Meanwhile, amid volatile domestic and overseas copper scrap prices, China's copper scrap import profit decreased, ranging from -Yuan 607.65/tonne to -Yuan 33.88/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.
Supply: Holders cautious on selling before holidays
In terms of copper scrap circulation, upstream holders were cautious and cut sales before the holiday. For red copper scrap, although copper prices fluctuated at highs, upstream traders were cautious pre-holiday, generally selling on rallies and adopting a quick in-and-out strategy. Limited available spot red copper scrap constrained traders' shipments. For brass scrap, merchants were fairly active in selling on rallies during the price uptrend. However, downstream demand fell short of expectations and scattered suppliers quoted high prices, so even after copper prices later retreated, most merchants remained weak in their willingness to restock and ship. 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 spot trading slows last week
China's copper scrap restocking fell short of expectations, and spot trading slowed further last week as the holiday neared. For red copper scrap, downstream pre-holiday restocking was nearing an end last week, with only essential buying maintained and downstream production and sales low. Due to policy uncertainty and the long holiday, most enterprises preferred invoiced copper scrap to avoid risk, but high prices and limited supply kept actual transactions low. For brass scrap, higher prices dampened end-user buying interest, and downstream orders were limited. With high feedstock costs squeezing margins, enterprises showed weak appetite for production and feedstock procurement.
According to Mysteel survey, before the Mid-Autumn Festival and National Day holidays, downstream secondary copper semis processing enterprises showed overall weak restocking willingness. Over 70% of producers explicitly stated no restocking demand, while only about 30% had restocking plans, mostly small and flexible. Markets in Anhui and Henan were relatively active, while producers in Hubei and Jiangxi were cautious.
Around China's National Day, the secondary copper semis processing industry is expected to maintain low-load operation, and raw material inventories are unlikely to rebound significantly in the short term. Going forward, focus should be on whether tax policy adjustments gradually settle. Before such improvement, the tight supply of tax-included copper scrap is expected to persist, downstream secondary copper semis processing product supply is unlikely to make a breakthrough, and secondary copper anode processing fees are expected to remain low.
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
