Chinese buying lifts ex-China coefficients [SMM Weekly Review on Secondary Copper Raw Materials Outside China]

SMM, September 30:

As of mid-week, LME copper prices showed a consolidating-to-weaker trend this week. LME copper opened at $14,583/mt on Monday, then weakened somewhat and consolidated around $14,450/mt. In terms of copper scrap prices, LME coefficients for copper scrap outside China edged up overall this week.

The rise in LME coefficients for copper scrap outside China this week was mainly driven by higher purchasing prices in the Chinese market. Affected by persistently tight invoice resources in China, high spot premiums for copper cathode, and disruptions to some imported cargoes, available copper scrap in the Chinese market remained tight, prompting buyers to further raise their overseas purchase quotes. Currently, the payable indicator for bare bright copper has risen to 98.5%-99.5%, No.1 copper to 97.5%-98.5%, and No.2 copper to around 96.5%, with some No.2 copper containing gold and silver quoted as high as around 98%.

As Chinese buyers continue to raise their purchase coefficients, the impact is gradually transmitting to markets outside China. Suppliers outside China have become more inclined to hold prices firm, and copper scrap quotation coefficients in some regions have also been raised accordingly. In the short term, with domestic invoice issues yet to be significantly resolved, imported cargoes still tight, and spot premiums for copper cathode staying high, LME coefficients for copper scrap outside China are expected to remain well supported.

In terms of trading, this week coincided with China's National Day holiday, and many downstream enterprises had already entered holiday mode, with market inquiries and purchasing activity noticeably reduced. At the same time, copper prices and copper scrap payable indicators are both at high levels, further limiting buyers' purchasing appetite, so overall trading sentiment was relatively mediocre.

Looking ahead to next week, as China's National Day holiday ends and downstream enterprises gradually resume purchasing, market trading is expected to recover somewhat. However, with available copper scrap outside China still limited and both copper prices and payable indicators at high levels, actual trading volume is unlikely to see a significant surge. In terms of prices, given tight copper scrap supply outside China and support from high copper cathode premiums, LME coefficients for copper scrap outside China are expected to have some room to edge up further.