SHANGHAI, Jul 17 (SMM) – Despite continued losses, most Chinese copper rod manufacturers with copper scrap as feedstock remained in low gear and held production stable from the previous month, as it will cost more to shut furnaces.
The average operating rate across scrap-using copper rod producers in China, however, fell 6.64 percentage points from May to 47.8% in June, showed an SMM survey, as several plants closed on poor benefits. The rate declined 18.53% from June 2018.
The discount of copper scrap against copper cathode peaked at 1,300 yuan/mt in June, from 700 yuan/mt at the start of the month, as copper prices rallied on rising hopes for a resumption of trade talks between the US and China.
Scrap-using copper rod producers continued to operate in losses in June, due to firm prices of copper scrap as supply concerns drove scrap traders to hold back sales.
The demand front could not provide comfort to scrap-using copper rod producers, either, as consumption across the power sector, the major consumer of copper rods, turned anemic since June.
Operating rates across Chinese copper rod producers with copper scrap as feedstock are expected to inch up 0.34 percentage point month on month to 48.14% in July, some 9.36 percentage points higher than the same period last year.
SMM learned that producers who shut in June have yet to resume.
About 580,000 mt in Cu content of copper scrap was imported into China in January-May, up 12.94%, or 67,000 mt in Cu content from the same period last year, according to SMM calculations based on data from China Customs.
China released the latest batch of import quotas for metal scrap last week, allowing 124,450 mt of copper scrap to enter China. Companies that received approval are from Tianjin, Zhejiang, Anhui, Jiangxi and Guangdong, and quotas for Guangdong companies accounted for 73.68% of the total.
This, together with the last batch of quotas issued in late June, totalled about 307,000 mt in Cu content, with a grade of 84%. This would account for 83% of, or stand some 70,000 mt lower than, imported volumes in the third quarter of 2018.
The increase in copper scrap imports in January-May and the anticipated third batch of import quotas will likely ensure stable copper scrap imports in the third quarter.