SHANGHAI, Mar 4 (SMM)—Many factories and traders cleared out copper scrap inventories before CNY. Newly produced copper scrap is unavailable until production resumes for a period of time after CNY. This, together with reluctance to sell amid bullish sentiment, resulted in limited amounts of copper scrap that was available in the market after CNY. However, copper scrap supply-demand imbalance was not severe as high copper prices also significantly inhibited copper scrap consumption. Scrap users reported poor orders and restocked copper scrap in small amounts as needed.
Unfavourable domestic and overseas copper price spread to inhibit sustained inflows of imported copper scrap
The customs data for January has not yet been released. According to past practice, the import data of copper scrap for January and February will be combined and will be released in late March.
SMM expects that the import volume of copper scrap in January and February should be lower than that in December last year as importers controlled imports due to CNY, with concentrated arrivals after the holiday. Short-distance transport capacity from Hong Kong to mainland China was limited before CNY, and began to gradually recover only recently.
Overseas copper prices performed much better than domestic prices recently, but this has little impact on the copper scrap that has been ordered. Multi-year high copper price brought big profit for importers, but may affect customs clearance profits of copper scrap traders. As copper scrap importers usually do not engage in hedging business, huge risk arising from price fluctuations will affect ordering of overseas cargoes after the holiday. Therefore, SMM believes that the current market environment is not conducive to sustained inflows of imported copper scrap.
