SHANGHAI, Jun 5 (SMM) – Chinese copper smelters and processors consumed less copper scrap in April as smaller price discounts against copper cathode lowered the appeal of copper scrap.

SMM data showed that copper scrap consumption across China came in at 188,900 mt in April, down 7.85%, or 16,100 mt, from March. About 59.77%, or 112,900 of copper scrap consumed in April were imported.

Consumption across processors accounted for 56.8%, or 107,300 mt, down 7,600 mt month on month. With poorer orders, the average operating rate across copper rod producers who use copper scrap as feedstock—a major copper scrap consumer—lost 4.27 percentage points to 66.98% in April, according to an SMM survey.

Copper prices fell sharply in May, further narrowing the spread between copper scrap and copper cathode. Prices of copper cathode-made rod came in at just 300 yuan/mt higher than those of copper scrap-made rod.

Such poor profitability has prompted some copper scrap rod producers to consider suspending production, which is set to further boost consumption of copper cathode.

Recent weakness in copper prices and tighter inflows of waste imports are expected to remain supportive of copper cathode consumption in the short term.

SMM data, based on statistics from China Customs, showed that China imported 144,100 mt in Cu content of copper scrap in April, sharply up from 89,300 mt in March. This created a year-over-year increase of 7.33% for copper scrap imports in January-April.

An import rush before import restrictions of Category Six waste likely accounted for the growth.

The Ministry of Ecology and Environment (MEE) said in May that it aims to release the first batch of approvals for Category Six scrap imports by the end of June.

Standards for copper scrap that is qualified for renewable resources imports are likely to be announced in October.