Survey: Chinese Copper Wire Rod Makers Use Less Scrap as Price Discounts Unattractive

SHANGHAI, Dec. 12 (SMM) – The proportion of scrap copper used by Chinese copper wire rod producers continued to stay low as the scrap discounts remained unattractive at 600-800 yuan ($98-131) per tonne, a Shanghai Metals Market survey showed.

At the same time, processing fees paid to copper wire rod producers hovered around 600-yuan-per-tonne level, further reducing price advantage of wire rods made from scrap, according to the SMM survey covering 22 producers nationwide. Some producers relying on scrap for production in north China have stayed closed as a result.

Copper wire rod producers, who are among the largest users of scrap copper in China, have been using less scrap in recent years as their buyers from cable and wire industry have been putting more emphasis on product quality, SMM’s copper analyst Zhu Wenjun said, adding it is hard to quantify the changes in proportions. 

The average ratio of raw materials to finished goods at the surveyed wire rod producers dropped by 1.58% on the month to 12.31% in November yet they expressed caution in restocking feeds due to weaker copper prices and tighter liquidity conditions towards the year end.
 
In addition, many Chinese smelters intended to raise contract premiums for their refined metal sales, which is set to be another constriction on wire rod makers’ profitability.