SHANGHAI, Apr 20 (SMM) – Stringent coronavirus containment measures imposed by world authorities in March began to take their toll on supply of imported copper scrap in China, which accounts for about 60% of copper scrap consumption in the country, showed the latest SMM survey.
Copper scrap traders, processors and dismantling plants all saw supply of imported materials tightening. Shortages of foreign copper scrap are expected to deteriorate in the next one month and a half at least, given the time it takes for the supply system overseas to recover and for vessels carrying cargoes to arrive at China.
This came just as domestic copper scrap supply in China recovered on a rally in copper prices. Copper scrap traders turned more willing to discharge their cargoes last week, as Shanghai copper futures rose for a fourth straight week and on expectations that lingering coronavirus worries would limit further upside in copper prices.
Recent price gains, however, were still not enough to prevent losses in selling copper scrap stockpiled ahead of the Lunar New Year holiday, and traders have yet to clear those stockpiles.
SMM assessed the discount for 1# bare bright copper against 1# copper cathode at the processing end at 256 yuan/mt, tax included, as of April 17, 152 yuan/mt wider than a week earlier.
Copper scrap discounts are unlikely to see much widening from current levels, as concerns about the fallout from the coronavirus will hamper upside potential in copper prices and as scrap supply in China will remain tight.
Small copper scrap discounts and raw material supply concerns are expected to keep scrap users in China from recovering production. SMM data showed that operating rates across Chinese copper rod producers who use copper scrap as feedstock stood at 18.54% in March. The rate is expected to inch up to 18.68% in April.
