Copper prices continue to fall, triggering supplier sentiment to sell [SMM Weekly Review of Secondary Copper Raw Material]

SMM News on July 11:

         Copper prices fell consecutively during the week due to the impact of US tariffs on copper, with a decline of 1,200 yuan/mt. The price of bare bright copper in Guangdong ranged from 73,000 to 73,200 yuan/mt, with a drop of 1,000 yuan/mt. When copper prices pulled back at the beginning of the week, suppliers of secondary copper raw materials generally held back cargoes. Copper rod enterprises reported that procurement volumes of raw materials were not satisfactory. However, after Trump suddenly announced a 50% tariff on imported copper starting from August 1 in mid-week, domestic copper prices reacted sharply. As copper prices continued to fall, many suppliers of secondary copper raw materials actively contacted copper rod enterprises to sell their raw materials. Although copper rod enterprises were concerned about the potential downside room in copper prices, they chose to procure a portion of secondary copper raw materials to maintain relationships with upstream suppliers, but required suppliers to price based on the 2508 contract, enabling copper rod enterprises to hedge in distant-month contracts.

        According to SMM's data on raw material inventory of sampled secondary copper rod enterprises, it stood at 6,000 mt, an increase of 1,200 mt MoM. Overall, the current inventory of raw materials for secondary copper rod enterprises is relatively abundant, ensuring continuous operation for 2-3 days.

       This week, the CIF quote for #1 copper scrap in the US was a discount of 130-132¢/lb against the COMEX July copper contract price. The CIF quote for #2 copper scrap was a discount of 134-136¢/lb against the COMEX 3M copper contract price. For brass scrap with a quality of 66-66.5% LME (delivered to non-China regions), the absolute price was $6,400-6,500/mt. The LME coefficient for CIF quotes of non-US Cu98.5% wire nodules was 96.5-96.75%, and for non-US bare bright copper, it was 98.5-99% LME.

       Looking ahead to next week, if copper prices stabilize, secondary copper rod enterprises may not follow suppliers' quotes in raw material procurement, but instead push down purchase prices to reduce losses from secondary copper rod sales.

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