To better meet the needs of its clients and to stay in tune with the market, SMM will be introducing CIF (Cost, Insurance, and Freight to China) pricing for copper scraps. This includes but isn't limited to imported #1 copper, #2 copper, #1 copper granule, and #2 copper granule. These prices will be officially available on the SMM website (smm.cn) from September 1, 2023.
SMM methodology for quoting cif (china) copper scrap prices
- Standards of SMM Pricing Methodology
SMM is an independent third-party service entity that doesn't partake in direct transactions. Acting as a market observer or organizer, SMM maintains close communication with buyers and sellers while offering market-related services. This document outlines SMM's pricing standards for imported copper scraps, aiming to establish a transparent, verifiable pricing mechanism.
2. Formation of SMM CIF (China) Copper Scrap Prices
2.1 Significance of Quotation
In response to the impact of the “carbon peaking and carbon neutrality goals under the new development philosophy” policy, both smelters and processing plants are increasingly seeking copper scraps. With domestic supply tightening and prices fluctuating, businesses are turning to overseas markets for stable resources. Therefore, to improve the structure of the copper industry and better understand its market dynamics, SMM will begin publishing weekly CIF (China) copper scrap prices from September 8, 2023. These indicative prices, based on SMM's methodology, serve as a reference for settling import trades of copper scraps. SMM price members will also be able to access historical prices.
2.2 SMM CIF (China) Copper scrap Pricing Methodology
2.2.1 Product Standards
Products must comply with the "Copper scrap" (GB/T 38471-2023) standard.
2.2.2 Price Terms
The price of CIF (China) copper scrap is in the form of a coefficient, often a discount factor to the LME three-month contract, expressed in percentages."
2.2.3 Payment Method
Quotations reflect weekly contract prices with payment via telegraphic transfer (T/T). Significant deviations may lead to exclusions, based on trade volume. Forward payments or letter of credit payments are adjusted according to current interest rates to meet this standard.
2.2.4 Price Format and Time: Prices are quoted as a range, from lowest to highest. SMM's CIF (China) copper scrap prices are released before noon on each week's final business day. Once set, prices are not adjusted based on post-publication market information.
2.2.5 Price Collection from Core Market Participants: SMM's CIF (China) copper scrap prices primarily stem from transaction prices of key market players, including overseas suppliers, domestic import factories, and traders of copper scrap. Pricing is based on real transaction data of these fixed participants, with SMM considering factors such as the relationship between trading parties, product quality and specifications, source, and payment terms to establish the price range.
2.2.5.1 Overseas Secondary Copper Suppliers
a. These suppliers have rich procurement channels, run sizable dismantling factories, produce stable copper scrap outputs, have influence and reputation, operate legally and ethically, with a positive market reputation.
b. They provide objective, truthful feedback on import secondary copper sales or purchases, including price, quantity, destinations, and inventory, and communicate well with SMM price analysts.
c. They have insights and anticipations on the macroeconomic situation, the secondary copper market, and market transactions, and maintain good communication with SMM price analysts.
2.2.5.2 Domestic Import Secondary Copper Factories
a. These factories follow a standard sales or procurement model, with smooth sales channels, stable sales or procurement volumes, considerable influence and reputation, legal and ethical operations, and a positive market reputation.
b. They provide objective, truthful feedback on import secondary copper sales or purchases, including price, volume, destinations, and inventory, and communicate effectively with SMM price analysts.
c. They have insights and expectations on the macroeconomic situation and secondary copper market transactions, and maintain good communication with SMM price analysts.
2.2.5.2 Copper Scrap Trading Companies
a. These companies adhere to a standard purchasing and selling model, with smooth trading channels, stable trading volumes, considerable influence and reputation, legal and ethical operations, and a positive market reputation.
b. They provide objective, truthful feedback on their own import and sale of copper scrap, including product quality, trading price, trading volume, purchasing sources, sales destinations, and inventory, and communicate effectively with SMM price analysts.
c. They have insights and expectations on the macroeconomic situation, the secondary copper market, and market transactions, and maintain good communication with SMM price analysts.
2.2.6 Data Standardization
Despite SMM's standardized pricing definitions, market transactions vary. Each transaction's price is influenced by numerous factors such as order size, goods source, delivery time, and payment terms. SMM integrates market quotations, bids, and transaction data, aligning them with our established standards.
2.2.7 Methodology Changes
SMM, aware of the ever-evolving markets, ensures our report methodologies adapt accordingly. We regularly review our methodologies based on industry feedback. For substantial but non-urgent changes, we follow a formal consultation process, announce significant amendments, and provide at least a 28-day notice for industry input, unless unforeseeable circumstances (natural disasters, wars, exchange bankruptcies, etc.) require a shorter notice. SMM commits to thoroughly examining all feedback but may occasionally need to make changes not favored by some participants. We have a formal consultation process and hold a consultation every three years, with dates found at the top of the methodology document
We invite more industry-related companies to participate, enabling us to better serve the secondary copper industry.
For inquiries, contact Xinyue Tian from the SMM.
021-51666715，tianxinyue@smm.cn
