Copper Prices Pull Back, Price Difference Between Primary Metal and Scrap Narrows [SMM Analysis]

SMM, February 28:

       The average weekly price difference between primary metal and scrap (including tax) was 1,688 yuan/mt, narrowing by 39 yuan/mt from last week's 1,727 yuan/mt. Copper prices fluctuated downward during the week, and the narrowing of the price difference was mainly due to suppliers of secondary copper raw materials holding low inventory levels and standing firm on quotes. However, tight raw material supply did not trigger increased raw material stocking demand from secondary copper rod enterprises. According to interviewed companies, the current operating rates of wire and cable enterprises are estimated at 40% in south China, 60% in east China, and about 70% in south-west China. With insufficient downstream demand, even the tight supply of secondary copper raw materials did not cause concern among secondary copper rod enterprises, which only maintained just-in-time procurement during the week. On the import side, it was mentioned last week that some import traders had resumed importing secondary copper raw materials from the US. However, this week, Trump announced an additional 10% tariff on all Chinese imports, bringing the cumulative additional tariffs imposed by the US on Chinese goods this year to 20%. Subsequently, secondary copper raw material importers may once again suspend imports from the US, putting China's secondary copper raw material supply at significant risk for the year.

       Looking ahead to next week, the domestic supply of secondary copper raw materials is expected to recover slowly. However, with overseas procurement gradually resuming, the supplementation of imported secondary copper raw materials will effectively alleviate the tight supply issue in the domestic market.

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