Suppliers Concerned About Policy Disruptions to Prices, Forced to Reduce Inventory [SMM Secondary Copper Rod Weekly Review]

SMM, December 27:

      This week, copper prices fluctuated upward, rising by 200 yuan/mt. Secondary copper raw material prices were 68,800-69,000 yuan/mt, up 100 yuan/mt. According to the SMM survey, as the month-end approaches, the specific implementation document for "reverse invoicing" will be issued after the New Year next week. Some secondary copper raw material suppliers are concerned about a short-term price drop and have started selling off their secondary copper raw material inventory. However, suppliers generally choose to sell only to secondary copper rod plants with good credit. Some secondary copper rod enterprises reported daily purchases of nearly 2,000 mt of secondary copper raw materials, forcing them to immediately issue notices to suspend procurement. Most secondary copper rod enterprises have decided to halt production starting in January, aiming to reduce secondary copper raw material inventory. This week, the secondary copper raw material inventory of sampled secondary copper rod enterprises was 6,500 mt, up 3,200 mt from 3,300 mt WoW. On the import side, traders in Ningbo Zhenhai reported that small quantities of secondary copper raw materials began to be sold at major warehouses this week. Currently, secondary copper rod plants are opting to halt production and observe policy implementation, leading to a short-term reduction in demand for secondary copper raw materials, which is considered normal. It is expected that after January, imported secondary copper raw materials with invoices will be more favored by secondary copper rod plants compared to domestic secondary copper raw materials.

        This week, the CIF quotation for #1 copper scrap was the COMEX 3M copper contract price minus 26-27¢/lb, while the CIF quotation for #2 copper scrap was the COMEX 3M copper contract price minus 32-33¢/lb. The CIF quotation for US brass scrap had an LME coefficient of 66.5-67%, with a fixed price of $6,100-6,150/mt (limited transactions). The CIF quotation for non-US Cu98.5% wire nodules had an LME coefficient of 96.25-96.5%, and the CIF quotation for non-US bare bright copper had an LME coefficient of 98.5-99% LME.

        Domestic secondary copper raw material suppliers are offloading inventory, while import traders are reducing import volumes at year-end. In January, both domestic and imported secondary copper raw material supplies are expected to decline. Coupled with policy implementation, secondary copper raw material suppliers are likely to maintain low inventory levels until after the Chinese New Year.

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