Tight secondary copper supply as higher copper prices drove sellers to hold back cargoes

Published: May 18, 2021 09:14

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Suppliers of secondary copper held onto their cargoes early last week when copper prices surged, tightening supply noticeably. Traded prices of #1 bare bright copper rose sharply, resulting in a sharp decline in the price spread between copper cathode and copper scrap.

SHANGHAI, May 18 (SMM)—Suppliers of secondary copper held onto their cargoes early last week when copper prices surged, tightening supply noticeably. Traded prices of #1 bare bright copper rose sharply, resulting in a sharp decline in the price spread between copper cathode and copper scrap. Raw material inventories at copper rod plants using copper scrap stood at two to five days of production. This combined with tight raw material supply prompted the plants to raise prices. Discounts of copper rods produced with copper scrap shrank from 2,100 yuan/mt to 600 yuan/mt, suppressing orders. Weak market optimism amid copper price declines increased selloffs at the end of the week. Plants restocked in large volumes, improving trades. But prices remained high.

Import losses for copper scrap rose to a high of 1,874 yuan/mt in late April as LME copper outperformed SHFE copper. Prices of imported copper scrap stood 10,000 yuan/mt higher than domestic prices, weakening purchases and import orders. According to SMM data, profits of #1 bare bright copper stood at 266 yuan/mt. If the import profit continues, supply of secondary copper should increase.

Prices of #1 bare bright copper without invoices averaged 69,110 yuan/mt last week, up 5,380 yuan/mt from the previous week. The average price spread between copper cathode and copper scrap narrowed 1,385 yuan/mt to 1,395 yuan/mt. For imported copper scrap, cif quotes for #1 copper scrap were Comex September copper less $0.2-0.21/lb, and offers for birch/cliff were Comex September copper less $0.31-0.33/lb. US brass was quoted at $ 6,150-6,200/mt. The coefficient for copper granules (98%) against LME copper stood at 93.5% on a cif basis, and the coefficient for bare bright copper against LME copper at 96.5-97%, on a cif basis.

Secondary copper Copper scrap

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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