Copper Prices Fall as Copper Scrap Holders Hold Back Cargoes [SMM Analysis]

After the holiday, the focus of copper prices shifted downward, with spot copper cathode prices dropping by 900 yuan/mt and Guangdong bare bright copper prices falling by 400 yuan/mt. According to an SMM survey, some copper scrap holders anticipated a post-holiday rise in copper prices and stocked a small amount of copper scrap. However, the post-holiday price drop was contrary to expectations, leading holders to hold back cargoes. Meanwhile, some copper scrap traders took short positions during the National Day holiday and needed to deliver after the holiday. These factors resulted in a lower circulation of copper scrap in the market compared to before the holiday. Most secondary copper rod plants reported that there was very little low-priced copper scrap available, and the prices of copper scrap nearly matched the sales prices of secondary copper rods, severely squeezing the profits of secondary copper rod production. After the National Day holiday, the inventory of copper scrap at secondary copper rod plants fell from 9,700 mt to 5,800 mt due to tight supply.

Last week, the CIF quotation for #1 copper scrap was a deduction of 21-23¢/lb from COMEX copper March contract prices, and for #2 copper scrap, it was minus 27-29¢/lb. US brass scrap (65-65.5% against LME) had a fixed price of $6,400-6,450/mt (with limited transactions). The CIF quotation for copper granules (Cu 98.5%) had a coefficient of 95.5-95.75% against LME, and for bare bright copper, it was 97.5-98% against LME.

Looking ahead to this week, the impact of falling copper prices on copper scrap prices will take time. The price difference between copper cathode and copper scrap is expected to widen from 1,700 yuan/mt to around 2,000 yuan/mt.