Smaller price spread between scrap, futures lowers copper scrap consumption in Dec-Shanghai Metals Market

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Smaller price spread between scrap, futures lowers copper scrap consumption in Dec

Data Analysis 06:06:56PM Jan 23, 2019 Source:SMM

SHANGHAI, Jan 23 (SMM) – China's copper smelters and processors consumed some 201,000 mt of copper scrap in December, down 7,800 mt, or 3.76% from November, an SMM research found.  

Consumption from both processors and smelters shrank on the month as a smaller price spread between copper scrap and futures reduced downstream purchases. 

Domestic smelters consumed some 51% of the overall copper scrap, while processing plants consumsed the remaining 98,400 mt. 

Falling prices of copper futures in December accounted for the smaller price gap. In December, the spread fell to a low of 952 yuan/mt from 1,686 yuan/mt at the beginning of the month, as prices of copper futures lost nearly 3,000 yuan/mt that month. 

Operating rates across scrap-using rod producers declined 4.04 percentage points from November, to 54.82% in December. These producers consumed some 98,400 mt of copper scrap last month, down 5,500 mt from November. 

Consumption of copper scrap in January will dip further as poor orders drive most processors to take breaks, from January 20. 

For December, some 102,600 mt of copper scrap was used across smelters, down 2,400 mt on the month. Some smelters raised the proportion of blister copper used in raw materials, at the expense of copper scrap, whose price advantage weakened. 

Offers of refining charges for blister copper held stable in December and dipped at the end of the month, to 1,450-1,650 yuan/mt. 

In 2018, the greater impact of environmental inspections shuttered small processors and smelters with copper scrap as raw materials. Environmental factors also affected domestic copper scrap supplies as unqualified scrap disassembling plants, especially in Guangdong province, were ordered to close.

Last year, overall copper scrap imports in Cu content rwree minimally affected by restrictions on the import of Category Seven copper. While the curbs lowered copper scrap imports by over 30% in physical content from 2017, imports in copper equivalent fell 50,000 mt. 

In December, imported copper scrap accounted for 52.6% of overall consumption, while domestic copper scrap accounted for 47.4%, according to SMM research. 

SMM maintains a bearish outlook on copper scrap consumption in 2019 as environmental curbs continue to exert pressure. A stricter import policy and downward room in copper prices will also weigh on consumption. 

Customs data released on Wednesday January 23 showed that China imported some 250,000 mt of copper scrap in December, down 6.3% from December 2017. This lowered overall imports of copper scrap in 2018 by 32.2% from 2017, to 2.41 million mt. 

Smaller price spread between scrap, futures lowers copper scrap consumption in Dec

Data Analysis 06:06:56PM Jan 23, 2019 Source:SMM

SHANGHAI, Jan 23 (SMM) – China's copper smelters and processors consumed some 201,000 mt of copper scrap in December, down 7,800 mt, or 3.76% from November, an SMM research found.  

Consumption from both processors and smelters shrank on the month as a smaller price spread between copper scrap and futures reduced downstream purchases. 

Domestic smelters consumed some 51% of the overall copper scrap, while processing plants consumsed the remaining 98,400 mt. 

Falling prices of copper futures in December accounted for the smaller price gap. In December, the spread fell to a low of 952 yuan/mt from 1,686 yuan/mt at the beginning of the month, as prices of copper futures lost nearly 3,000 yuan/mt that month. 

Operating rates across scrap-using rod producers declined 4.04 percentage points from November, to 54.82% in December. These producers consumed some 98,400 mt of copper scrap last month, down 5,500 mt from November. 

Consumption of copper scrap in January will dip further as poor orders drive most processors to take breaks, from January 20. 

For December, some 102,600 mt of copper scrap was used across smelters, down 2,400 mt on the month. Some smelters raised the proportion of blister copper used in raw materials, at the expense of copper scrap, whose price advantage weakened. 

Offers of refining charges for blister copper held stable in December and dipped at the end of the month, to 1,450-1,650 yuan/mt. 

In 2018, the greater impact of environmental inspections shuttered small processors and smelters with copper scrap as raw materials. Environmental factors also affected domestic copper scrap supplies as unqualified scrap disassembling plants, especially in Guangdong province, were ordered to close.

Last year, overall copper scrap imports in Cu content rwree minimally affected by restrictions on the import of Category Seven copper. While the curbs lowered copper scrap imports by over 30% in physical content from 2017, imports in copper equivalent fell 50,000 mt. 

In December, imported copper scrap accounted for 52.6% of overall consumption, while domestic copper scrap accounted for 47.4%, according to SMM research. 

SMM maintains a bearish outlook on copper scrap consumption in 2019 as environmental curbs continue to exert pressure. A stricter import policy and downward room in copper prices will also weigh on consumption. 

Customs data released on Wednesday January 23 showed that China imported some 250,000 mt of copper scrap in December, down 6.3% from December 2017. This lowered overall imports of copper scrap in 2018 by 32.2% from 2017, to 2.41 million mt.