Affected by LME copper prices, China's copper scrap prices had showed rise and then suppressionduring the National Day holiday. The highest price of bare bright copper in the mainstream market was Yuan 58,100/tonne, rose by more than Yuan 1,000/tonne compared with that before the holiday. Then it was pulled back to Yuan 57,200/tonne, which was Yuan 200/tonne higher than that before the holiday.
Most copper scrap traders were still trading during this National Day holiday. Mysteel copper scrap analysis team has conducted a survey on the post-holiday inventory status of 30 traders as follows:
Province | Trader |
Monthly Trade Volume (t) |
Inventory Status |
Hebei | No.1 | 2,000 | No inventory |
Hebei | No.2 | 500 | Small amount of red-impure-copper inventory |
Hebei | No.3 | 200-400 | More than 50 tonnes of inventory, with bullish expectations |
Hebei | No.4 | 1500 | No inventory |
Hebei | No.5 | 600 | 60 tonnes of inventory |
Shandong | No.6 | 1000 | 60 tonnes of inventory |
Shandong | No.7 | 1,000 | 20 tonnes of inventory |
Shandong | No.8 | 500 | No inventory, with 60 tonnes of short orders |
Shandong | No.9 | 3,000-3,500 | No inventory |
Tianjin | No.10 | 500-800 | 40 tonnes (80 tonnes before holiday) of inventory |
Tianjin | No.11 | 500 | 40 tonnes of inventory, with tight supply |
Henan | No.12 | 200 | 15 tonnes of inventory |
Hunan | No.13 | 800-1,000 | 40 tonnes of inventory |
Hunan | No.14 | 1000 | 60 tonnes of the inventory |
Hunan | No.15 | 300 | 50 tonnes of inventory |
Anhui | No.16 | 300 | 8 tonnes of inventory |
Anhui | No.17 | 800-1,000 | more than 100 tonnes of inventory, mainly red copper scrap |
Guangdong | No.18 | 600 | 30 tonnes of inventory |
Guangdong | No.19 | 500 | No inventory |
Guangdong | No.20 | 2,000-3,000 | No inventory |
Guangdong | No.21 | 2,000 | dozens of tonnes of inventory, with 160 tonnes of short orders |
Guangdong | No.22 | 300-400 | 100 tonnes of brass scrap inventory, bearish on copper price |
Guangxi | No.23 | 1,000 | No inventory, bearish on copper price |
Jiangsu | No.24 | 500 | No inventory |
Jiangsu | No.25 | 300-500 | 8 tonnes of brass scrap inventory |
Jiangsu | No.26 | 600 | No inventory |
Zhejiang | No.27 | 1,000 | 100 tonnes of inventory, with tight supply |
Zhejiang | No.28 | 200 | 20 tonnes of inventory |
Zhejiang | No.29 | 200 | more than 20 tonnes of inventory |
Guizhou | No.30 | 200-300 | 20 tonnes of inventory |
Data source: Mysteel |
As table shows, there are 9 traders with no inventory after the holiday, and some of them chose to clear up all the inventory during the holiday. The other 21 traders had inventory but with tight supply. A part of traders held short orders for delivery. The trading was not active this year during the National Day holiday, which mainly caused by following reasons:
1. Reducing trade volume. China's infrastructure and real estate industries remain sluggish. The amount of copper scrap and dismantling has been reduced, resulting in a tight supply of copper scrap. The import volume of copper scrap is less than expected mainly affected by the global epidemic and economic downturn.
2. Narrowing trade profit. Copper scrap supply gap leads to strong spot prices, the price spread between refined and scrap is difficult to pull. The production cost of copper scrap processing enterprises increases, resulting in its low acceptance of premium. Traders' trade profits have been narrowed seriously.
3. Low confidence in the price. During the holiday, although copper scrap trading sentiment had been slightly boosted by macro news, but the Fed's expectations of aggressive interest rate hikes remained strong, which led to strong market risk aversion. Most market participants were not optimistic about future copper prices, and trading was more cautious.
Outlook: Most copper scrap inventory of processing enterprises was not much after 7 days of consumption. After the holiday, market demand for copper scrap raw materials increased. In addition, survey showed that traders' inventories were also less than expectation. During the holiday, some traders chose to replenish inventory at high prices, but the actual transaction was less. It is expected that after the holiday, copper scrap prices in the context of increased demand and low inventory background will get a strong support, which will lead to a narrower price spread between refined and scrap. But the current global situation changes on the macro impact of copper prices still need to be paid attention to. There are too many uncertainties, such as the intensifying conflict between Russia and Ukraine, the rising energy crisis in Europe and the hawkish news from the Fed.
For queries and more information/data/reports access, please contact Paula Xu at xuzhongping@mysteel.com