Tight copper concentrate supply is reshaping raw material procurement across the copper industry. Recycled copper is no longer merely a substitute for primary copper but is becoming increasingly important for smelters and copper fabricators seeking to secure feedstock.
As of August 21, the SMM Imported Copper Concentrate Index had fallen to -$182.14/dmt, down $6.77/dmt WoW. Deeply negative spot TCs continue to squeeze smelting margins, encouraging companies to increase their use of recycled feedstock.
How Is Mine-Side Tightness Affecting Copper Scrap?
For smelters, recycled materials can supplement concentrate supply and reduce reliance on concentrate TCs. Complex copper-bearing materials may also generate additional returns from gold, silver and other recoverable metals. Meanwhile, high-grade scrap such as Millberry can reduce copper fabricators’ dependence on copper cathode.
Rising demand has accelerated the drawdown of copper scrap inventories, while new scrap generation has failed to keep pace. As a result, payabilities remain high and falling inventories continue to support scrap prices.
Why Is China Buying More Imported Scrap?
According to SMM market surveys, tradable copper scrap inventories at Chinese companies remain low. Existing stocks are mainly No. 1 and No. 2 copper scrap, while Millberry remains relatively scarce.
Meanwhile, some tax-excluded material or cargoes with incomplete invoices continue to accumulate outside regular circulation channels. Physical inventories therefore do not fully represent the effective supply available to compliant companies.
Imported copper scrap generally has complete customs, tax and invoice documentation, making it easier for compliant companies to purchase. China’s rising import demand therefore reflects both tight supply and growing compliance requirements.
SMM data also show that copper scrap inventories in Japan and South Korea remain low, strengthening suppliers’ willingness to hold firm and supporting high-grade scrap payabilities.
Outlook
As long as copper concentrate TCs remain low and VAT-invoiced scrap supply in China stays tight, Chinese buyers are expected to remain dependent on imports, supporting global copper scrap payabilities.
However, high copper prices, weak downstream orders and squeezed processing margins will limit bids, particularly for lower-grade material. Another key variable is the tax-excluded scrap accumulated in China. If clearer tax policies allow this material to re-enter compliant circulation, domestic supply could increase and place pressure on both Chinese and global scrap prices.
SMM believes high scrap prices are being supported by concentrate tightness, low global inventories, slow scrap generation and China’s shortage of compliant material. These factors are expected to keep global inventories low and payabilities elevated.
