Copper Prices Consolidate at Highs, Suppressing Demand; Secondary Copper Category Coefficients Diverge [SMM Ex-China Copper Scrap Weekly Review]

SMM, August 14:

LME copper prices continued to consolidate at highs this week. On Monday, LME copper prices opened at $14,063/mt and then moved sideways within the $13,950-14,280/mt range. Payable indicator trends for ex-China copper scrap showed some divergence. In particular, the payable indicator for bare bright copper stayed high throughout the week on tight supply, with mainstream quotations still hovering around 98.5%-99%. In contrast, affected by maintenance at some smelters and demand curbed by high copper prices, the consumption pace of No. 1 and No. 2 copper slowed slightly, and their quotations pulled back slightly. Currently, transaction payable indicators are mostly around 96%-97% for No. 1 copper, around 95.5% for US No. 2 copper, and mostly around 94.5%-95% for European No. 2 copper.

Transaction side, the continued consolidation of copper prices at highs further dampened downstream purchasing interest. Combined with the traditional consumption off-season, downstream orders were relatively mediocre, and enterprises mainly stayed on the sidelines and made just-in-time procurement, leaving the overall market trading atmosphere sluggish. Some traders, affected by the need to recoup funds, became more willing to sell and could only facilitate transactions through moderate price concessions, which also led to some pullback in No. 1 and No. 2 copper prices. In contrast, supply of bare bright copper remained tight, and its strong substitution properties for copper cathode provided relatively strong downside support for prices; its discount rate did not loosen noticeably.

Looking ahead to next week, with copper prices still high and downstream consumption slowing, social inventories of copper scrap in some regions are expected to accumulate slightly. For bare bright copper, supported by tight supply, the payable indicator is expected to stay high; for No. 1 and No. 2 copper, prices may still face slight pullback pressure amid slowing smelting demand and weak market transactions. Overall, trading in the ex-China copper scrap market is expected to remain relatively sluggish next week, and payable indicator trends may continue to diverge.