SHANGHAI, Nov 30 (SMM)—The tight supply of domestic and imported copper scrap will prevent the price spread from expanding until the second half of December, according to SMM survey.
Previous inventory declines have resulted in low inventories of domestic copper scrap. In this scenario, sharp gains in copper prices failed to lead to large quantities of copper scrap offered for sale.
Imports of copper scrap did not increase significantly. Approved quotas for copper scrap imports have been utilised and imports based on approved quotas will continue to decline without the issue of new approvals.
Most of the importers have imported cargoes in small quantities even as the new policy for secondary copper imports took effect on November 1. Those cargoes are slated to arrive in the first half of December, and large volumes of shipments arrivals are unlikely to occur until late December or January. Operating rates at copper rod producers using copper cathode as raw material are expected to rise due to the absence of significant increase in the spread on processing fees between copper rods produced with copper cathode and with copper scrap. This should ensure continued declines in copper inventory.
Copper prices have risen and hit the highest for the year on the back of expectations over the COVID-19 vaccine development and better-than-expected economic data from the US. However, the price spread between copper cathode and copper scrap did not widen, preventing the price spread between copper rods produced with copper cathode and with copper scrap from expanding. Processing fees of 8 mm scrap-using copper rods in Guangdong stood at -400 yuan/mt, and processing fees of copper rods produced with copper cathode stood at around 380 yuan/mt, with a spread of 780 yuan/mt, 100 yuan/mt wider compared to two weeks earlier.
For more information on the copper sector, please subscribe to China Copper Weekly.
