Suppliers Bullish on Future Copper Prices Choose to Hold Stocks for Higher Gains [SMM Secondary Copper Raw Material Weekly Review]

SMM March 21 News: This week, copper prices rose by 1,300 yuan/mt, and the price of bare bright copper in Guangdong also increased by 1,300 yuan/mt. Copper prices continued to rise, with secondary copper raw material prices increasing at the same rate as refined copper. The main reason is the limited circulation of secondary copper raw materials in the market. Suppliers of secondary copper raw materials stated that even if copper prices rise further, it would be difficult for them to acquire more raw materials. Additionally, many yard managers are optimistic about copper prices, expecting a significant increase similar to previous years during March-April. As a result, there is a shortage of secondary copper raw materials in the market, and suppliers are holding onto their stocks, anticipating higher prices. Due to the insufficient supply, many secondary copper rod enterprises are hesitant to purchase at high prices, only meeting basic procurement needs. According to SMM data, the raw material inventory of sample secondary copper rod enterprises this week was 4,100 mt, down 170 mt from 4,270 mt last week. In terms of imports, the import volumes of secondary copper raw materials in January and February were 189,200 mt and 193,300 mt, respectively, with US-sourced secondary copper raw materials at 39,400 mt and 31,400 mt, lower than 43,900 mt in December. It is expected that the import volume of US secondary copper raw materials in March will further decrease, facing a supply shortage. This week, the CIF quotes for #1 copper scrap from the US were at COMEX May copper contract minus 62-64¢/lb, and the CIF quotes for #2 copper scrap from the US were at COMEX 3M copper contract minus 73-75¢/lb. The LME coefficient for US brass scrap CIF quotes was 65-66%, with a fixed price of $6,500-6,600/mt (limited transactions). The LME coefficient for non-US Cu98.5% wire nodules CIF quotes was 95.75-96.25%, and the LME coefficient for non-US bare bright copper CIF quotes was 98.5-99% LME. Looking ahead to next week, the short-term pullback in copper prices is expected to be limited. The sustained high copper prices are causing difficulties for secondary copper rod enterprises, with some indicating that they may not be able to procure enough raw materials for operations and might have to reduce production days.