Supply-demand factors constrained coefficient fluctuations, while pre-holiday restocking drove a slight improvement in buying interest [SMM Weekly Review on Secondary Copper Raw Materials Outside China]

SMM, September 18:

This week, LME copper prices showed an overall bottoming-out trend. On Monday, LME copper opened at $14,017/mt, dipped briefly before climbing steadily, then consolidated around $14,450/mt. As for copper scrap prices, the LME payable indicator for copper scrap outside China remained generally stable this week, showing no significant fluctuations despite the rise in copper prices.

Currently, both upside and downside room for the LME payable indicator for copper scrap outside China is somewhat limited, making a notable adjustment unlikely in the short term. On one hand, with copper prices staying high, downstream enterprises' acceptance of the current LME payable indicator for copper scrap has approached a stage-level high, capping further upside for the LME payable indicator. On the other hand, spot premiums for copper cathode have recently stayed high, strengthening some consumers' demand for copper scrap. Combined with persistently tight supply of copper scrap outside China and limited available cargoes, this provides solid support for the LME payable indicator. Under the combined influence of these two factors, the LME payable indicator for copper scrap outside China has remained relatively stable recently.

In terms of transactions, with China's National Day holiday approaching, some downstream enterprises have shown restocking demand ahead of the holiday, and market buying interest improved slightly from earlier levels. However, the tight supply situation has not eased, with overall offer volumes in markets outside China remaining limited. Meanwhile, the quality of some cargoes has declined, constraining actual transactions. As a result, overall market transaction performance this week remained relatively subdued.

Looking ahead to next week, copper prices are expected to hold up well, supported by tight spot supply and low inventory. However, the LME payable indicator for copper scrap is unlikely to see a significant rise or pullback, as high copper prices cap upside while tight supply and high spot premiums provide downside support, keeping it generally stable. In terms of transactions, if copper prices rise further, downstream purchase willingness may be suppressed again. At the same time, low inventory among suppliers outside China will further strengthen their resolve to hold prices firm, intensifying the price standoff between buyers and sellers, with the possibility of market trading activity slowing down once again.