China's economy is expected to improve in 2023, and the stronger stimulus policy has boosted the confidence of market participants. What's the situation of China's secondary copper industry in this context? Mysteel's Copper Scrap Team investigated the situations and viewpoints of secondary copper processing enterprises in Jiangxi Province which is a main gathering place of secondary copper processing enterprises in China.
According to Mysteel's survey, the shortage of copper scrap supply in China has been partially alleviated after the Spring Festival, mainly due to the release of supply and the downturn of demand caused by high copper prices. Due to the lack of new orders, the raw material inventory of processing enterprises has accumulated. In addition, because the preferential policy of copper scrap in Jiangxi is weaker than in other regions, the cost of processing enterprises is squeezed, and the competition is more fierce.
The current high copper price is boosted by the expectation of economic recovery, but there is a mismatch between it and the weak demand, so it is expected that the price will have room to fall.
Mysteel's Survey of Jiangxi Secondary Copper Processing Enterprises | |||||
Enterprises | Utilization Rate |
Capacity | Order | Inventory | Viewpoints |
A | 50% | 120kt | Still short supply of copper scrap boosted transactions, while the imported copper scrap was still in a loss state and piled up in warehouses. |
- | Due to the more obvious price advantage of copper scrap and the longer Spring Festival holiday of downstream enterprises, copper scrap was easier to purchase recently. |
B | 25% | - | Rarely purchases from end-users, mainly arbitrage orders from traders. |
Only 1-2 days of raw material inventory, more finished product inventory because orders from traders have not yet been picked up. |
Due to the weak local preferential policies of copper scrap, the supply has been tight in recent years, and profits have been constrained. |
C | 50% | Copper anode 100kt & secondary copper rod 100kt |
About 8kt in Feb, orders mostly from traders. |
4kt each inventory of raw material and finished products, and the slow sales lead to accumulation of inventory. |
It is inclined to export copper scrap, resulting in a high supply pressure for domestic enterprises. |
D | 50% | - | Mainly bulk orders, about 3kt per month |
Normal | Plans to increase production capacity by 200kt, but remains cautious due to fierce competition. |
E | 50% | - | Decrease year-on- year. |
Maintain minimum safety inventory. |
The increase in consumption after the epidemic is lagging behind, and it is expected that orders will gradually appear in Q3-Q4 2023. |
F | 65% | Copper anode 100kt & secondary copper rod 200kt |
Fair. | Maintain inventory on demand, and which can be purchased easily |
Demand will continue to improve, but the process will be slow. |
G | 50% | - | Not ideal | About 1.5kt, all have been booked. |
Plan to increase 150kt of production capacity in Q3-Q4 2023, but the picking- up progress of downstream enterprises is slow. |
Data Source: Mysteel |
If you would like to join in such on-site commodity surveys in China with us, please feel free to contact Paula Xu at xuzhongping@mysteel.com
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com