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| China’s Copper Scrap |
China saw a 5.4% decline in copper scrap imports during September, as the narrowing price spread between refined copper and scrap diminished demand. By the end of August, the price gap had shrunk to around 1,200 yuan per ton (Yn/t) or $169/t, down from over 2,000 yuan/t earlier in the month, driven by copper prices hitting a five-month low.
Shrinking Margins Reduce Scrap Buying Activity
Market players indicated that the narrowing spread discouraged scrap purchases, particularly from fabricated product producers. Many smelters and secondary producers held back on procurement once the spread dipped below the 1,400 yuan/t level, widely considered the breakeven threshold.
Simultaneously, lower copper prices in August dissuaded scrap sellers from delivering material, as they preferred to wait for more favorable market conditions.
Shift Toward Scrap as Feedstock
The rising cost of copper concentrate forced many refined copper producers to shift to copper scrap as a substitute feedstock. This pivot contributed to a 16% increase in copper scrap imports between January and September.
Copper Concentrate Supply Squeeze
The copper concentrate market faced its own challenges, with a significant supply shortage driving treatment and refining charges (TC/RCs) down by 85% during the same nine-month period.
This interplay of high costs, supply constraints, and price volatility highlights the complexity of China’s copper trade landscape as stakeholders adapt to shifting market dynamics.
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SCRAP
