This week, the copper scrap market operated under the interweaving influences of fluctuating copper prices, the approaching Dragon Boat Festival holiday, and ongoing compliance inspections on "reverse invoicing," presenting structural characteristics of "regional divergence in supply, essential demand-driven procurement, and transactions driven by invoices rather than prices." In terms of copper price trends, SHFE copper was affected by the delivery of the front-month contract, rising first and then falling during the week, with a cumulative increase of 510 yuan/mt. However, the rebound was limited. The price of tax-excluded bare bright copper in Guangdong followed with an increase of 200 yuan/mt to 91,600-91,700 yuan/mt. The upward trend in prices once stimulated the willingness to sell among copper scrap suppliers, pushing the sales sentiment index back up to 2.5. However, downstream procurement did not follow suit, with daily transactions being mediocre, indicating that under the current invoice constraints, a rise in prices does not equate to a release of demand. The price difference between primary metal and scrap fluctuated within a wide range of 2,000-3,000 yuan/mt, and the pace of market transactions was entirely driven by price changes, lacking stable endogenous demand support.
On the supply side, the core conflict this week further focused on the policy compliance level. The compliance work on "reverse invoicing" in south China, including Hubei and Jiangxi, was deeply promoted, leading to widespread production halts at local secondary copper rod enterprises and a noticeable reduction in spot available-for-sale supplies. Traders reported that shaft furnace rods were experiencing a localized tight balance with undersupply, in sharp contrast to the sluggish sales in the northern market. This was not because overall demand was strong, but because the compliant and invoice-issuable supply was constrained. Meanwhile, the impact of the invoice difficulties was expanding: following Jiangxi and Hubei, local enterprises in Shuyang County, Jiangsu, also received notices that "reverse invoicing" quotas would be restricted starting in June. Local enterprises experienced varying degrees of production declines due to the invoice constraints. However, some secondary copper rod enterprises indicated that the recovery in copper prices boosted raw material prices, prompting some suppliers to sell their tax-paid inventories. As a result, they were still able to procure a certain amount of tax-paid copper scrap this week for production reserves during the Dragon Boat Festival holiday.
The demand side was dampened by both invoice risks and the holiday rhythm. Downstream end-user enterprises, worried about the tax compliance issue of "selling goods ≠ being able to issue invoices in the same month," limited their pre-holiday procurement volumes. They prioritized shaft furnace rods to ensure production continuity, leaving transactions of secondary copper rods at a "mediocre" level. In terms of price spread structure, the price spread between primary and secondary copper rods fluctuated within a range of 860-1,490 yuan/mt over the week in tandem with copper price fluctuations. The economic advantage of secondary copper rods remained unstable, only supporting rolling restocking for essential needs, and could not generate continuous large-volume procurement. Against the backdrop of both "invoice-issuable supply" and "invoice-issuable sales" being constrained, price rebounds were more likely to turn into a stalemate of "prices without volume."Looking ahead to next week, the market remains somewhat optimistic about tax policies, with many enterprises expecting new tax regulations to be introduced in H2 that will help scrap utilization enterprises improve their input invoice processes, thereby enabling a rapid resumption of production. Therefore, in the short term, trading in the copper scrap market will continue to be driven by invoices rather than prices. Whether the post-holiday market can shift from a narrow-range tussle to genuine volume growth hinges not on copper price movements, but on whether compliance inspections in regions such as Jiangxi and Hubei can establish stable and actionable operational guidelines, and whether enterprises’ input invoices and supplies of tax-inclusive raw materials can recover. Otherwise, the regional divergence—marked by “tight shaft-furnace rod supply and slack secondary copper rod” in South China and “ample quotes but thin transactions” in the north—will persist.
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