China’s Copper Scrap Imports Surge in July Due to Favorable Market Conditions

China witnessed a notable increase in copper scrap imports in July, with volumes rising by 14.8% compared to the previous month. This surge was largely driven by a reduction in import arbitrage losses, which had previously deterred buyers. The arbitrage loss, which had narrowed to between -Yn1,000 and -Yn1,500 per tonne in June from nearly -Yn6,000 per tonne in May, played a crucial role in boosting imports.

Earlier this year, copper prices on the London Metal Exchange (LME) reached a record high of $11,104.50 per tonne, making copper concentrate an expensive option for Chinese producers. As a result, many producers shifted to using copper scrap as a cost-effective alternative, leading to a 20% increase in imports during the first half of the year.

The ongoing supply shortage of copper concentrate also impacted the market, causing treatment and refining charges (TC/RCs) to drop by 88% from January to June. Additionally, the cancellation of a tax rebate on 1 August further encouraged secondary copper processors to opt for copper scrap, even at full tax rates. This trend is expected to continue, supported by the more favorable arbitrage conditions in July.