[SMM analysis] scrap copper consumption fell further in April than expected in May

SMM6, April 4, news:

According to the SMM survey, the national consumption of scrap copper in SMM in April was 188900 tons, a decrease of 16100 tons, or 7.85 percentage points, from the previous month. Copper scrap flows to the processing end of 107300 tons, accounting for about 56.80%, to the smelting end of 81600 tons, accounting for about 43.20%. Among them, the consumption of imported scrap copper was 112900 tons, accounting for 59.77%, and the consumption of domestic scrap copper was 76000 tons, accounting for 40.23%.

In April, the total amount of waste used at the processing end was 107300 tons, a decrease of 7600 tons compared with the previous month. In April, the price of copper in Shanghai fluctuated, during which the price gap narrowed to about 1,000 yuan. The advantage of scrap copper price has faded, the consumption performance has been flat, the orders of scrap copper rod making enterprises have declined, and the consumption of scrap copper has decreased. According to SMM survey data, the operating rate of scrap copper rod enterprises in April was 66.98%, a decrease of 4.27 percentage points from the previous month and 7.12 percentage points from the same period last year. Copper prices continued to fall sharply in May, scrap copper has no consumption advantage, refined copper rod and scrap copper rod price difference of only 300 yuan or so, some scrap copper rod factories have considered suspending production because of poor ordering efficiency, which is expected to boost the consumption of refined copper rod in May and June. Given the weakness of copper prices and the tightening of import supply, scrap copper can still form a positive support for copper consumption in the short term.

According to SMM statistics, in April 2019, China imported a total of 144100 tons of scrap copper, a sharp increase over the previous month, resulting in a cumulative increase of about 30, 000 tons, or 7.33 percent, from January to April compared with the same period last year. Due to the effect of snatching imports, the import of scrap copper increased significantly in April, making the import of scrap copper from negative to positive. Before the implementation of the "six types" scrap copper policy in the first half of the year, the supply of imported scrap copper is expected to remain stable. At present, due to the uncertain factors of import approval, the performance of market demand is on the sidelines, the trade of imported scrap copper is greatly affected, and the price of imported scrap copper is still falling. According to SMM, no enterprise has yet received the approval quota, and the Ministry of Ecology and Environment said it is striving to issue the first batch of approvals by the end of June, and the standard for the conversion of scrap copper to resources is expected to be announced around October. At present, it has not been seen that the import scrap copper policy has an impact on production enterprises.

(SMM Wei Xue)