SHANGHAI, Jun 23 (SMM) - According to customs data, China's copper scarp imports in May amounted to 158,000 mt (in physical content, the same below), up 16.9% MoM and 13.46% YoY. The combined imports of copper scrap from January to May stood at 716,000 mt, up 6.74% YoY.

In terms of import sources, the imports from the US were 29,100 mt in May, an increase of 13.75% MoM and 61.78% YoY, accounting for 18.4% of China’s total imports, and ranking first among the supplying countries. Also in May, the imports from Malaysia amounted to 16,000 mt, an increase of 22.49% MoM and a big decrease of 36.54% YoY. Imports from Thailand in May were up 56.69% YoY. The introduction of tighter import standards for metal scraps in Malaysia earlier has significantly weakened its position as a transit hub, which is gradually being replaced by other countries.

In 2021, China allows the import of high-quality copper scrap in large quantities without an approval. As such, since 2021, China's copper scrap imports have been maintained at a high level. And in May 2022, the imports of scrap rebounded mainly because the import market was boosted after copper scrap imports turned profitable in late April.

SMM believes that with the import window opening again, copper scrap imports will continue to pick up, but it is still difficult to ease the domestic supply tightness. On the one hand, market players should be wary of the sharp fall in copper prices in June, which has prompted the traders to refrain from selling and resulted in contracting trading volume. As of June 22, the spread between copper cathode and scrap has been -444 yuan/mt.

On the other hand, overseas take the lead to shake off the impacts of pandemic, generating more demand for copper scrap. In other words, the increase in overseas sources will be limited, and it is difficult to reverse the situation of supply tightness in China simply by replying on rebounding imports.