SHANGHAI, Mar. 28 (SMM) - At the SMM 2017 Copper & Aluminum Summit, Zhang Zhizhao, Senior Analyst from Tongling Nonferrous Metals Group Holding Co. Shanghai Branch, gave his takes on secondary copper market.
He sees little recovery in secondary copper in the following 2-3 years. Copper output using ores as raw material accelerates, while secondary copper output slows. There are barely any new copper smelting capacities using copper scrap as raw materials in the coming 2-3 years, he explains.
But copper scrap has increasing replacement advantage for copper cathode. The SHFE/LME copper price ratio rose after copper prices climbed in 2017. The price spread between copper scrap and copper cathode tracked by SMM had been expanding from November 2016 to February 2017. Copper rod or other copper semis producers began to use copper scrap as raw material.
However, such advantage weakened after the price spread narrowed in March. Importers will increase copper scrap imports when the price ratio is favorable. China’s copper scrap imports will increase in 2017 from 2016.
The secondary copper market will see limited growth in the next 2-3 years. Sulfur ratio increases because of ageing and recycling ratio of secondary copper worldwide. But in the long-term, mining cost for copper concentrate will rise, so copper scrap’s replacement advantage will improve. As such, secondary copper market is still promising in the next 5-10 years. After more than ten years of rapid development, scrapping in China’s automobile market and recycling ratio are expected to increase.
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