SHANGHAI, Jul 23 (SMM) – China's copper scrap imports last month declined 39.8% from a year ago to stand at 200,000 mt, according to data from China Customs. This lowered imports during January-June by 37.8% on the year to 1.15 million mt.
On the monthly basis, the imports fell some 10,000 mt from May, due to China's stricter inspections of all US-imported scrap from May 4. The decline was in line with SMM's expectation, given the typical one-month shipment duration from the US to China.
Last week, some 73,800 mt of Category Seven copper scrap received the green light in the latest 16th batch of approvals for restricted solid scrap imports, according to China's Ministry of Ecology and Environment (MEE).
The 16th batch brought the total approved Category Seven copper scrap imports this year to 715,400 mt, down 76% from the volumes approved in a total of 11 batches last year.
While we expect the volume of such approved copper scrap imports in the third quarter to exceed the 270,800 mt seen in the second quarter, they still face restrictions in the long run as Category Seven scrap materials will be completely banned from the end of this year.
China’s copper scrap imports include Category Seven and Six materials.
Separately, less supply of copper scrap is set to depress the operating rate across Chinese copper rod producers that use scrap as raw materials this month.
The operating rate in July is estimated at 47.17%, down 19.15 percentage points from June. The rate in June dipped 2.36 percentage points from May and registered at 66.33%.
Copper prices started to fall from mid-June, leading to a narrowing price spread between cathode and scrap, which approached zero as of Monday July 23.
This held back copper scrap sellers, and drove the price of copper rod made from scrap higher than those produced from copper cathode. In addition to rod producers, copper plate, strip, and foil makers are also more willing to utilise refined copper instead of scrap as raw materials.
SMM research found that some scrap-using copper rod producers have suspended production of late.
The price of #1 refined copper came in at 48,730 yuan/mt as of Monday July 23, compared with a six-month high of 53,790 yuan/mt on June 11, according to SMM assessment.
