SHANGHAI, May. 14 (SMM) –
According to China Customs, China's imports of scrap copper in April were 370,000 mt, down 13.97% MoM and 2.24% YoY. Imported scrap copper, especially high-quality scrap copper, has faced considerable losses since Chinese New year, with losses as high as USD 3,800/mt. Scrap copper importers have now begun to import brass or low-quality scrap copper in order to maintain production, with scrap wire, cable, and motors as sources. Domestic consumption remained slack in April, while low-oxygen copper rod producers, the major consumers of scrap copper, saw orders fall from March levels. Scrap copper importers believed that goods ordered during that time would arrive at ports during the seasonal low demand period, so this and other factors forced importers to scale back orders and led to a significant drop in April's scrap copper imports. Since the SHFE/LME copper price ratio has remained low for a prolonged period of time, imported scrap copper is unlikely to arrive at ports in any large quantities. In this context, SMM believes China's scrap copper imports in May will remain below 400,000 mt.
Unwrought Copper and Copper Semis
According to China Customs, China's imports of unwrought copper and copper semis in April were 375,000 mt, down 87,000 mt MoM, but up 42.9% YoY. The MoM drop in April imports was in line with market expectations, and despite copper price declines during April, the SHFE/LME copper price ratio was still down sharply. Losses for copper importers during April were more than RMB 3,000/mt for the third consecutive month. Long-standing losses gradually weakened market demand for imported copper, so the low-end spot premium for imported copper remained between USD 20-30/mt, well below the long-term contract level of USD 110/mt. Long investor activity in London has strengthened since mid-April and caused spot copper premiums there to climb to near three-year highs. The SHFE/LME copper price ratio will not likely improve appreciably over the near term, so China's imports of unwrought copper and copper semis should fall again during May.