Supply Tensions Intensify, Copper Anode Market Tightens [SMM Analysis]

SMM reported that in August 2024, blister copper RCs in south China were quoted at 800-1,000 yuan/mt, with an average of 900 yuan/mt, down 200 yuan/mt MoM. In north China, the quotes were 900-1,100 yuan/mt, averaging 1,000 yuan/mt, down 100 yuan/mt MoM. CIF imported blister copper RCs were quoted at $105-125/mt, with an average of $115/mt, down $5/mt MoM.

In August, the decline in domestic blister copper production further tightened the market supply-demand balance, causing RCs to continue to drop. The decrease in blister copper production was mainly due to a reduction in the use of secondary copper as raw material. The Fair Competition Review Regulations came into effect on August 1, but the specific implementation measures in various regions remain unclear, leading to higher invoiced copper scrap prices and tighter supply. Meanwhile, the sharp drop in copper prices in early August further exacerbated the tendency of copper scrap holders to hold back cargoes, resulting in significant production cuts and shutdowns among copper anode producers. On the demand side, as the shortage of copper concentrate is unlikely to improve significantly in the short term, coupled with the consumption of raw material inventories at smelters and plans for new expansion projects, market demand remains strong.

In north China, due to the decline in RCs and increased transportation costs, most smelters have suspended purchasing copper anodes from south China. However, the resumption of production by suppliers who had previously undergone technical upgrades and maintenance has alleviated some pressure, and the north China market has returned to primarily long-term contract execution, with RCs stabilizing.

On the import side, the supply of mined copper anodes remains limited, with few spot transactions. However, due to the tight domestic market, demand for mixed copper anodes from regions such as Asia and Europe has increased.

As of August 30, SMM weekly quotes for blister copper RCs in south China were 700-900 yuan/mt, averaging 800 yuan/mt. In north China, the quotes were 900-1,100 yuan/mt, averaging 1,000 yuan/mt. CIF imported blister copper RCs were quoted at $100-120/mt, with an average of $110/mt. Domestic copper anode processing fees were quoted at 450-550 yuan/mt, with an average of 500 yuan/mt.

Looking ahead to September, the implementation of the new policy will still require a transition period, and the production of secondary copper anodes will remain constrained in the short term, putting significant pressure on the supply side. Some smelters may see production affected due to a shortage of blister copper and copper anode. Although RCs are still on a downward trend, the limited market production and the fact that RCs have already touched or fallen below the cost line suggest that the room for further decline is limited.