[SMM Weekly Review on Copper Scrap Outside China] Weak Trading Amid Copper Price Consolidation, and Copper Scrap Discount Hard to See a Pullback

SMM reported on July 3:

LME copper prices moved sideways this week. On Monday, LME copper opened at $13,317/mt before fluctuating around the $13,100-$13,500/mt range. Affected by the limited price fluctuations, the conversion rates of ex-China copper scrap transactions remained largely unchanged overall. Mainstream quotations for bare bright copper ex-China held around 98.5%-99%, while No.1 copper semis quotations were mostly concentrated in the 97%-98% range, and No.2 copper semis quotations varied from 95% to 98.5% depending on material quality and gold/silver content.

From the supply-demand fundamentals, the copper scrap market continued to show weak supply and demand. Supply side, the outflow of secondary copper declined further, with most enterprises reporting a marked tightening of available material in the market. In terms of recent trade volume changes, market trading activity also pulled back significantly over the past month. Demand side, in addition to the seasonal off-season drag, some enterprises held a bearish view on the copper price outlook, expecting the US dollar to strengthen further, and maintained a cautious procurement pace, mostly preferring to wait for a pullback in copper prices before restocking. As a result, overall purchasing sentiment remained weak this week, and the trading atmosphere stayed sluggish.

Looking ahead to next week, if Middle East tensions ease further and market concerns about US Fed rate hikes cool down, copper prices could see a phased rebound. In that scenario, the price rise is expected to boost some suppliers' willingness to sell. However, given that overall ex-China copper scrap supply is still tight, the related conversion rates are expected to stay high, and even if copper prices rise, the rates are unlikely to pull back significantly.