Domestic Blister Copper RCs Plummeted as Market Supply Outlook Turned Pessimistic [SMM Analysis]

In July 2024, SMM blister copper RCs in south China were quoted at 1,000-1,200 yuan/mt, with an average of 1,100 yuan/mt, down 850 yuan/mt MoM. In north China, RCs were also quoted at 1,000-1,200 yuan/mt, with an average of 1,100 yuan/mt, down 450 yuan/mt MoM. CIF imported blister copper RCs were quoted at $110-130/mt, with an average of $120/mt, unchanged from the previous month.

In July, the domestic blister copper market saw a significant reversal in supply-demand dynamics, leading to a sharp drop in RCs. The market supply turned from loose to tight, primarily due to a sharp decline in domestic supply. In May, copper prices soared, resulting in a surge in copper scrap supply. However, the profit margin for copper rod made from copper scrap was much lower than that for copper anode. Consequently, many copper rod plants using copper scrap as raw material focused on producing copper anode and sent it to smelters, leading to a temporary oversupply. As smelters accumulated large stocks of copper anode, they mainly digested inventory in June, causing RCs to soar.

However, copper prices began to fall in June, reducing the supply of copper scrap and rapidly narrowing the price spread between secondary refined lead and SMM #1 lead. Secondary copper rod makers shifted back to producing copper rod made from copper scrap, leading to a decline in copper anode production based on copper scrap. In July, copper prices continued to decline, making copper scrap even scarcer. Additionally, the impending implementation of Document No. 783 impacted the secondary copper market, prompting secondary copper processing enterprises to cautiously procure and cut production, significantly reducing copper anode output. By the end of July, many producers had halted production.

On August 2, SMM weekly blister copper RCs in south China were quoted at 800-1,000 yuan/mt, with an average of 900 yuan/mt. In north China, RCs were quoted at 900-1,100 yuan/mt, with an average of 1,000 yuan/mt. CIF imported blister copper RCs were quoted at $110-130/mt, with an average of $120/mt. Domestic copper anode RCs were quoted at 500-600 yuan/mt, with an average of 550 yuan/mt.

The rapid contraction in supply over the past two months has tightened the blister copper market. Entering August, copper prices remained weak, and most companies chose to wait and see the policy implementation. The market supply outlook remains pessimistic, and domestic blister copper RCs are still under downward pressure.