Copper prices retreat after rapid rise, bare bright copper coefficient remains firm [SMM weekly review on copper scrap outside China]

SMM, September 11:

This week, LME copper prices continued to rise early in the week, briefly touching a high of $14,875/mt before quickly pulling back to around $14,250/mt. In terms of copper scrap prices, the LME payable indicators for bare bright copper remained generally stable this week. No.1 copper and No.2 copper saw slight corrections after copper prices broke historical highs early in the week, but as copper prices pulled back sharply toward the end of the week, their LME indicators did not fully recover to previous highs.

By category, bare bright copper, supported by persistently tight supply and strong downstream rigid demand, maintained high LME payable indicators, with current quotes approaching the upper range acceptable to the market. Therefore, even if copper prices continue to rise, bare bright copper indicators are unlikely to see a significant pullback in the short term.

In contrast, No.1 copper and No.2 copper indicators performed relatively weaker. First, wild swings in copper prices near historical highs significantly dampened downstream purchase willingness, with enterprises mostly adopting a wait-and-see approach. Second, after the rapid pullback in copper prices, some suppliers outside China became more inclined to hold back from selling, widening the quote divergence between buyers and sellers. In addition, the SHFE/LME price ratio for imports in China has yet to show notable improvement, further limiting domestic buyers' purchasing enthusiasm. As a result, No.1 copper and No.2 copper indicators showed relatively limited recovery after copper prices pulled back.

In terms of transactions, this week's sustained surge in copper prices and intensifying volatility led to another slowdown in market activity. Downstream enterprises generally maintained a wait-and-see stance, waiting for copper price fluctuations to stabilize before making purchases. Suppliers actively tried to sell at high copper prices, but actual transactions were mediocre due to weak downstream buying interest.

Looking ahead to next week, with copper price fluctuations still significant, buyers and sellers are expected to remain largely on the sidelines in the short term, waiting for copper prices to further stabilize. For copper scrap, tight supply will continue to support payable indicators, but high copper prices and weak purchasing sentiment also limit further upside room. Overall, LME payable indicators for copper scrap outside China are expected to remain high and stable.