SHANGHAI, Jul. 29 (SMM) – Hebei and Guangdong, particularly its Nanhai County, reported tight scrap copper supply lately, SMM’s survey shows, as scrap imports fell sharply and as downstream buyers increases purchase amid wide price gap between scrap and refined copper.
China’s scrap copper imports plunged by 13.1% on the month to merely 263,500 tonnes in June, and down 21.78% from a year ago, Customs data indicate.
Some companies surveyed by SMM said tighter control over L/C issuance following Qingdao’s metal financing probe largely pushed up costs and risks for importing scrap copper, causing some to switch to domestic trade.
In addition, rising labor costs and stringent environmental protection requirements underscored advantage of investing in other Asian countries, such as Vietnam and Thailand, attracting companies to build factories overseas for cost control, which also dampened demand for imported scrap.
Some told SMM that many Guangdong’s firms began establishing factories in the US due to friendly policies there and the recovering US economy.
SMM also finds in the survey that utilization rates at mid-sized and small scrap copper processors were below 30% in some regions of Guangdong. Some of these enterprises only produced to orders and requested payment in cash, while some others simply shifted to other businesses and used their facilities and equipment as collateral. Scrap copper consumption thus sagged in these regions.
That said, some companies are bullish towards copper prices, and expect scrap copper demand to improve in H2 with copper prices on the rise.