Secondary Copper Raw Material Shortage in the Spot Market: Will There Be a Turnaround in December? [SMM Analysis]

According to SMM, the current supply of secondary copper raw materials in the spot market is relatively low, raising concerns about a supply deficit. So, will this situation improve in December? Here is SMM analysis of the current secondary copper raw material market and future trends.

Tight Supply of Imported Secondary Copper Raw Materials: In the overseas market, concerns about a US economic recession persist, leading to a continued tight supply of copper scrap. With falling copper prices, overseas suppliers stand firm on quotes. As of the week ending November 22, US secondary copper raw material prices remained unchanged, showing no significant volatility. Meanwhile, traders in the Ningbo spot market reported that due to tight supply, quotes for secondary copper raw materials remained firm. Since mid-November, the spot price of imported bare bright copper has consistently been quoted at Changjiang copper price minus 500 yuan/mt. Additionally, SMM has learned that customs clearance at Port Klang West in Malaysia has been stalled since September. Recently, scrap enterprises reported that due to the complete halt of customs operations, container clearance has been slow, and currently, import and export activities are at a standstill. As a result, SMM expects that Malaysia's exports of secondary copper raw materials to China will decrease in November and December.

The domestic secondary copper raw material market also shows signs of tight supply: According to SMM, the quantity of domestic secondary copper raw materials circulating in the spot market has been very low recently, with November circulation volume nearly 30% lower than October. Some secondary copper rod enterprises reported tight supply and significant difficulties in raw material procurement. This is mainly due to the impact of copper prices, which have fluctuated around 73,000-74,000 yuan/mt since mid-November, after once falling below 75,000 yuan/mt. According to secondary copper raw material suppliers, they prefer to hold onto their stock in anticipation of price increases, with some even choosing not to sell on certain days, waiting for copper prices to rise above 75,000 yuan/mt before they are willing to sell.

Future Outlook: The macro market in November has been relatively quiet, with significant wait-and-see sentiment among traders, leading to mediocre procurement activities. However, with December approaching and the year-end nearing, some enterprises and traders may increase their procurement volume to stockpile enough secondary copper raw materials to meet future production needs. If import traders increase their procurement of secondary copper raw materials, the tight supply situation may ease. Additionally, if copper prices rebound, suppliers' willingness to sell may also increase, further improving market supply conditions. However, attention should be paid to the impact of the Malaysian customs halt on the import volume of secondary copper raw materials. Moreover, there has been no public announcement of the specific duration of this customs halt. SMM will provide timely updates if there is any new information.