March 16 (Bloomberg) -- China, the world's biggest copper user, will probably buy more scrap this year as supply improves, according to Aurubis AG, Europe's biggest smelter.
China resorted to buying more copper cathodes, or refined metal, last year as a slump in global manufacturing curbed scrap supply. That helped shore up prices as demand for commodities weakened amid the worst global recession since World War II.
The nation imported 4 million metric tons of recyclable materials in 2009, compared with 5.58 million tons in 2008, said Gerd Hoffmann, vice president of commercial recycling at Aurubis, citing Chinese customs data. About 30 percent of that was copper, he estimated.
"The Chinese could not get hold of as much scrap as they liked and had to buy more cathodes," Hoffmann said by phone yesterday. "Probably that was one of the main reasons why copper went up."
Copper prices more than doubled in London last year, the steepest gain since at least 1986. That was despite a drop in global demand estimated at 2.3 percent by Barclays Capital and a 48 percent jump in warehouse stockpiles monitored by the London Metal Exchange.
"I expect the Chinese to import more copper scrap than last year, but I doubt they are in for another record," Hoffmann said. Imports reached an all-time high of 5.59 million tons in 2007, he said.
Scrap makes up about 40 percent of world copper supply because reusing metal is cheaper than mining and refining ore. Collection of used metal tends to improve when copper prices rise or industrial production expands.
Higher prices have "supported the supply of scrap, and merchants are more willing to enter sales commitments," Hoffmann said. "The market is fairly balanced."
Increased supply has caused scrap's discount to the LME price to widen to 270 euros ($369) to 300 euros a ton this quarter, Hoffmann said. That compares with 120 to 150 euros a year ago, he said. He cited No. 2 scrap, which contains 92 percent to 96 percent copper.
Aurubis's recycling plants, which can process about 500,000 tons of materials a year, have been operating at full capacity since June.