Weekly Review of the Secondary Copper Market: Price Stability and Volume Contraction Persist, Year-End Invoice Constraints Dampen Trading Activity

This week, the secondary copper market continued its pattern of "stable prices and shrinking volumes" against the backdrop of fluctuating and declining copper cathode prices, with overall trading activity remaining sluggish. The center of copper prices shifted down by 600 yuan/mt, while the price of bare bright copper in Guangdong edged up by 200 yuan/mt to a range of 82,000–82,200 yuan/mt, demonstrating the resilience of recycled copper raw material prices. Despite price adjustments, suppliers, constrained by limited inventory and strong price-holding sentiment, did not significantly increase market supply in response to price fluctuations. On the demand side, persistent weakness continued, as secondary copper rod enterprises, affected by insufficient end-user orders and restricted invoice quotas, maintained only essential procurement, resulting in limited raw material transaction volumes during the week. Regional market divergence was evident: bare bright copper prices in east China held steady at around 82,500 yuan/mt, but trading activity remained low; in south China, markets such as Foshan showed relatively stable demand for high-grade copper scrap, though overall transactions were still dominated by spot orders.

The invoice market continued to tighten, with the invoice tax rate rising to 7.5% in Guangdong and reaching 8% in Jiangxi, increasing corporate funding costs and further squeezing profit margins. Approaching year-end, secondary copper rod enterprises faced pressure from downstream end-users or traders to issue sales invoices. However, due to insufficient input invoices or local tax restrictions on total invoicing amounts, most companies prioritized using existing invoice quotas to meet previous sales commitments, leading to varying degrees of production cuts this week to ensure compliance with invoice usage regulations. Data showed that the operating rate for secondary copper rod this week was 14.45%, down 3.71 percentage points WoW and significantly lower by 17.5 percentage points YoY. The average price spread between primary and secondary copper rods narrowed to 1,952 yuan/mt, down 278 yuan WoW; the average discount of secondary copper rod in Jiangxi against copper futures decreased to 1,606 yuan/mt, narrowing by 120 yuan/mt WoW. Although secondary copper raw material prices remained stable, and the price difference between primary metal and scrap further narrowed to 3,981 yuan/mt, down 775 yuan/mt WoW, the average gross profit from secondary copper rod sales rose to 1,705 yuan/mt, up 198 yuan/mt WoW, reflecting enterprises’ ability to balance cost control and price adjustments. In the import market, non-US #1 copper scrap CIF offers were at 95-95.5% of LME 3M, while non-US #2 copper scrap under Chinese standards were offered at 95.5-96% of LME 3M. US-origin brass scrap (61.5-62% LME) flowed to non-Chinese regions. Non-US Cu98.5% wire nodules CIF offers were quoted at an LME coefficient of 94.75-95.25%, and bare bright copper CIF offers were at 96.75-97.25% of LME. US-origin bare bright copper offers to Southeast Asia were at 96-96.5% of LME, with #1 copper and #2 copper (ISRI standard) quoted at 94-95% LME and 92.5-93% LME, respectively. Supply-side pressure emerged, as reduced anode plate demand in December led to accumulation of finished product inventories among spot order producers. Long-term contract enterprises delayed invoicing due to tax invoice quota constraints, further dampening market activity. Some traders accelerated cargo pick-up after profiting from futures arbitrage, which provided slight recovery in secondary copper rod market transactions. However, end-use demand showed no substantial improvement, and the weak supply-demand pattern persisted.

Looking ahead to next week, the shortage of invoices is unlikely to ease quickly, and the operating rate of secondary copper rod enterprises is expected to see limited improvement, with a slight rebound projected to 14.71%. In the short term, copper price fluctuations will continue to dominate market sentiment. If copper prices stabilize within the range of 91,500-92,500 yuan/mt, some restocking demand may be released. However, amid the traditional consumption off-season and high inventory pressure, upside room for prices remains limited. On the policy front, attention should be paid to adjustments in tax invoice quotas and changes in anode plate demand. If invoice pressure eases after the New Year, enterprise production pace may gradually recover. Overall, the market is expected to remain in a tight balance with weak supply and demand. It is advisable for industry participants to cautiously control inventory levels and optimize cash flow management to navigate the complex year-end market environment.