Zhejiang Hailiang: Analysis of Downstream Consumption Status of Secondary Copper in China [SMM Copper Industry Conference]

On April 24, at the CCIE-2025SMM (20th) Copper Industry Conference and Copper Industry Expo - Green Development Forum for the Secondary Copper Industry, organized by SMM Information & Technology Co., Ltd., SMM Metal Trading Center, and Shandong Aisi Information Technology Co., Ltd., with Jiangxi Copper Corporation and Yingtan Land Port Holding Co., Ltd. as the main sponsors, and Shandong Humon Smelting Co., Ltd. as the special co-organizer, Xinhuang Group and Zhongtiao Mountain Nonferrous Metals Group Co., Ltd. as co-organizers, Zhang Junbing, the Minister of Secondary Copper Operations at Zhejiang Hailiang, elaborated on the downstream consumption status of secondary copper in China. 01 Composition of the Copper Industry Chain The copper industry chain is a complete closed-loop system covering from ore mining to end-use consumption and then to scrap recycling, characterized by global division of labor and high recyclability. Primary copper industry chain accounts for 60%~62%, with global copper ore reserves estimated at 870 million tons (2023 USGS data), providing a static assurance period of only 40 years; the secondary copper industry chain accounts for 38%~40%, which can increase the copper resource utilization rate to over 90% (Note: According to 2024 ICSG data). ► Primary Copper Industry Chain It also introduced the copper production of major countries such as Chile, DRC, and Peru over the past five years. ► Secondary Copper Industry Chain 1. Sources of Copper Scrap • Industrial Scrap (60%): Off-cuts generated during smelting/processing (e.g., copper shavings, anode slime). Manufacturing scrap (e.g., leftover materials from wire and cable production). • Post-Consumer Scrap (40%): Scrap from discarded electronic devices (computers, mobile phones), vehicles (motors, wiring harnesses), and construction debris (pipes). 2. Secondary Copper Production Process • Scrap Sorting: High-grade scrap can be directly smelted; low-grade scrap requires dismantling and sorting. • Dismantling and Pre-treatment: Mechanical crushing, magnetic separation (to separate iron), eddy current separation (to separate aluminum), and manual sorting (to separate plastics). • Smelting and Refining: Reverberatory furnace/electric furnace smelting: Low-grade scrap, producing blister copper followed by electrorefining. Converter smelting: High-grade scrap, directly producing copper anodes. 3. Distribution of the Secondary Copper Industry • Raw Material Exporting Countries: US (15% of global exports), Germany (9%), Japan (6%), mainly exporting low-grade scrap. • Processing and Consumption Countries: Domestic: 35% of global secondary copper consumption, with Ningbo, Zhejiang (scrap import and dismantling) and Yingtan, Jiangxi (scrap refining) as core bases. Southeast Asia: Malaysia and Thailand, leveraging free trade zone policies, have become transit and processing centers for European and American scrap. ► Significant Energy and Economic Advantages of Secondary Copper It introduced the upstream copper production situation in the global market over the past five years and the domestic market's upstream copper production over the past five years from the perspective of mined copper and refined copper production. 02 Distribution of the Secondary Copper Industry ► Major Global Distribution Areas for the Secondary Copper Industry Major Exporting Countries/Regions ♦ North America US: The world's largest exporter of secondary copper; Canada: Relying on the North American automotive industry chain, mainly exporting to the US and East Asia; ♦ Europe Germany: The largest exporter of secondary copper in Europe; UK, Netherlands: Leveraging port advantages, becoming hubs for European secondary copper trade; ♦ Japan A major Asian exporter, primarily from the dismantling of home appliances and vehicles; The Home Appliance Recycling Law: Mandates the recycling of discarded appliances, forming an efficient circular system; Major Importing Countries/Regions ♦ Domestic: The world's largest importer and consumer, accounting for over 30% of global trade volume; ♦ Southeast Asia (Malaysia/Thailand/Indonesia): Close to China, with relaxed policies (e.g., Malaysia allows non-metallic bonded processing), attracting the transshipment and local dismantling of secondary copper from Europe and America; ♦ Other Countries: South Korea, India: South Korea, relying on electronic waste, has a self-sufficiency rate of 30% for secondary copper; India's imports of copper scrap are increasing year by year, mainly used for low-end copper product processing; Domestic Trade/Processing Concentration Zones Tongling, Anhui; Daye, Hubei: Combining local primary copper smelting capacity, coordinating the processing of scrap; Yingtan, Jiangxi: Relying on JCC, forming a "scrap dismantling - smelting - refining" industry chain; Bohai Economic Rim: Linyi, Shandong ("Copper Capital of Northern China"), Baoding, Hebei (scrap wire and cable dismantling); Yangtze River Delta: Ningbo, Zhejiang (main port for imported scrap), Zhangjiagang, Jiangsu; Pearl River Delta: Foshan, Guangdong (concentration area for scrap brass and copper alloy trade). Characteristics of the Global Secondary Copper Industry Chain Distribution 2021-2025, global secondary copper exports show a "US-dominated, regional differentiation" feature, with Mexico and Saudi Arabia rising due to geographical advantages, while the share of traditional European exporters gradually decreases. ► US Secondary Copper Export Data About 30% of global copper scrap supply comes from the US, but after 2023, total exports showed a fluctuating downward trend due to Sino-US trade friction, domestic solid waste import bans, US domestic recycling policies, and soaring copper prices. The US, through the Inflation Reduction Act, promotes the return of manufacturing, with Mexico and Canada becoming the core of the nearshore supply chain, strengthening the regional circulation of scrap. Mexico and Canada account for over 50%, forming a "North American Loop"; India and Southeast Asia become new growth points, with the domestic market further contracting. 2021-2025, US secondary copper exports show a "neighborhood priority, Asian differentiation" feature, with Mexico replacing the domestic market as the largest destination, and the importance of markets like Canada and India increasing. Domestic: Continued decline in 2022, expected to further decline in 2025: Sino-US trade friction, tightening of domestic scrap copper import policies (e.g., "solid waste import ban"). Mexico and Canada, due to the Nearshoring trend, become the core destinations for US scrap. The Middle East and Southeast Asia, as transit hubs, indirectly channel US scrap to the domestic market (e.g., Saudi Arabia, Malaysia). ► Domestic Secondary Copper Imports Two stages of secondary copper imports Stage One: 2015-2019, solid waste management stage; Stage Two: 2020-2024, free import stage for secondary copper raw materials. 03 Current Status of Secondary Copper Consumption ► Core Areas of Global Copper Consumption Power Industry: • Proportion: 40%~45% • Applications: Power transmission (wires and cables, ultra-high voltage power grid), motors, transformers, communication cables, etc. Construction Industry • Proportion: 10%~12% • Applications: Wires and cables, copper water pipes, decorative materials (door handles, lighting fixtures, etc.). Transportation Industry • Proportion: 12%~15% • Applications: Wiring in internal combustion engine vehicles, radiator copper (23 kg/vehicle), NEVs (83 kg/vehicle), charging piles (35 kg/pile). Home Appliance Industry • Proportion: 10%~12% • Applications: Air conditioners (60% of copper used in home appliances), refrigerators, washing machines' condensers, and evaporators. Electronics Industry • Proportion: 8%~10% • Applications: Semiconductor chips, printed circuit boards, data centers, AI devices. 1 MW data center uses 65.8 mt of copper, GPU servers use 3 times the amount of copper compared to regular servers. According to the latest 2024 data, global copper consumption shows an "Asia-Pacific dominance, emerging market rise, and steady changes in Europe and America" pattern; the structure of copper consumption varies significantly across different regions. ♦ The copper usage trend in NEVs is undergoing structural changes, driven by technological iteration, policy support, and deep integration with global energy transition. Copper Usage per Vehicle Pure EVs: Copper usage per vehicle reaches 80-120 kg (traditional ICE vehicles use only 20 kg), mainly concentrated in batteries (current collectors, soft connections), motors (winding wires), electric control (radiators), and charging systems (high-voltage wiring harnesses). For example, a pure EV with a 500 km driving range uses about 25-38 kg of copper foil in its battery, 12-15 kg in its motor, and 23 kg in its high-voltage wiring harness. Commercial Vehicles: Electric buses use 224-369 kg of copper, 11-16 times that of traditional diesel buses, mainly for large power motors and high-voltage battery systems. Technological Differentiation: PHEVs use about 60 kg of copper per vehicle, while FCEVs, due to the complexity of hydrogen fuel cell systems, may use more copper but are not yet widely adopted. ♦ Extension of the Industry Chain and Demand for Supporting Facilities Charging Piles: A single DC fast-charging pile uses 60 kg of copper. In 2024, China added over 2 million new charging piles, driving 120,000 mt of copper usage. Battery Recycling: In 2024, China's retired power batteries amounted to about 1.2 million mt, with a secondary copper recovery rate of less than 30%. However, under policy promotion, the target for 2025 is to increase this to 40%, expected to reduce carbon emissions by 3.24 million mt. ► Global Copper and Secondary Copper Consumption It discussed the global and domestic copper and secondary copper consumption from 2014 to 2024, the proportion of secondary copper in total copper consumption, and the ratio of copper and secondary copper consumption. 04 Future Challenges and Opportunities New energy and high-end manufacturing will lead growth, but resource constraints and capacity bottlenecks still exist; Expected: 2025 global apparent consumption of refined copper 28.5 million mt, 2025 global copper deficit 18~50 million mt, and a 10 million mt global copper supply gap over the next decade. ► Main Challenges: Geopolitics and Trade Policies: Increased tariffs on copper will shift global inventories to North America, with LME inventory decreasing by 30%, but China's refined copper imports reduced to 150,000 mt/month. This will bring uncertainty to copper prices, with COMEX and LME price spreads experiencing sharp fluctuations. Penetration of Alternative Technologies: Advances in aluminum as a substitute for copper, such as Tesla Model 3 using aluminum busbars, reducing copper usage by 8 kg per vehicle; composite current collectors expected to have a penetration rate of 18.8% by 2025. Technological Bottlenecks: Recycling technology needs improvement, with over 85% of power battery recycling rates, but the "cascade utilization + material regeneration" industry chain is not yet mature, limiting the purity of secondary copper for high-end applications. In 2025, the tariff policies of major countries on Chinese NEVs will show a "protectionism resurgence + regional differentiation" feature, with key economies using tariff barriers, countervailing duties, and carbon tariffs to restrict the entry of Chinese products, while guiding the industry chain transfer through localization requirements. Southeast Asia: Tariff Differentiation and Industry Chain Synergy: Indonesia - a two-way strategy as a resource country; Thailand - a manufacturing hub with low tariffs; Vietnam - policy swings and geopolitical balance. ► High-Quality Development Plan for the Copper Industry (2025-2027) - Policy Support, Resource Assurance, Technological Innovation, Green Transformation, Industry Chain Synergy, and Market Expansion.

Capacity-Driven: The implementation plan proposes to "steadily advance a new round of strategic actions for mineral exploration breakthroughs," focusing on the construction of copper resource bases in regions such as Tibet, Xinjiang, and Yunnan. It is estimated that domestic copper resources will increase by 5%-10% by 2027. For example, the second-phase expansion project of the Yulong Copper Mine in Tibet will add 5 million mt of copper metal reserves, with annual capacity increasing to 200,000 mt.

Tax Refund Support: A 30% VAT immediate tax refund after payment and a 90% reduction in corporate income tax for secondary copper enterprises will be implemented, driving the proportion of secondary copper production from 25% in 2024 to 28% in 2027.

New Energy Vehicles: "Notice on the 2025 Vehicle Trade-in Policy," "Detailed Rules for Subsidies on the Replacement of New Energy City Buses and Power Batteries in 2025" by the Ministry of Transport, "Key Focus Areas for the Development of the New Energy Vehicle Industry in 2025" by the MIIT, and "Guidance on Accelerating the Construction of Charging Infrastructure" by the MIIT.

►Key Corporate Response Strategies

"Mining + Recycling + Overseas" Diversified Supply System: Upstream resource layout: global mineral resource exploration; supply chain optimization: long-term contract locking, regional resource construction;

Focus on High-Value-Added Products and Low-Carbon Transformation: Product structure optimization: high-end copper semis, lightweight applications, etc.; low-carbon technology application: green electricity substitution + carbon footprint certification;

Policy Hedging and Financial Tools: Trade policy response: tariff avoidance, compliance review; financial tool application: hedging, price insurance;

Dual-Driven Emerging Fields and Regional Markets: Emerging demand development: AI data centers, hydrogen energy, and ESS; globalization layout: regional market deepening.

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