SMM Weekly Review on Scrap Copper Consumption Advantages (Dec. 5-9)

SHANGHAI, Dec. 15 (SMM) –Last week, the price differential between bare bright (including tax) and refined copper continued to increase, up between RMB 600-900/mt, reverting to a normal price relationship for the first time recently. This reversion to norm may be attributed to the fact that, first, copper futures prices have held at relatively high levels recently, while scrap copper cargo-holders' reluctance to sell has waned as imports arrived, driving scrap copper prices lower than refined copper. Second, the premium paid for VAT receipts has been sliding as the end of the year nears since activity on the scrap copper market lightens, helping expand the price gap between scrap (including tax) and refined copper. Third, large copper smelters finished their inventory build-ups at relatively low prices, which, when combined with sluggish sales in copper rod, has led to weak demand for scrap copper, helping scrap copper prices ease. Last week, though copper smelters and copper rod producers became more willing to purchase scrap copper due to the differential between scrap and refined copper, sluggish orders kept overall demand lackluster.