Copper Prices Rebound at Week's End, Marginal Improvement in Copper Scrap Supply [SMM Copper Scrap Weekly Review]

SMM July 3 News:

       In the first week of July (June 30 - July 3), the copper scrap market operated under three overlapping factors: the second week after the implementation of the new reverse invoicing rule, the start of the high-temperature off-season, and copper prices hovering around the 100,000 yuan/mt threshold. The overall supply-demand weakness that had persisted since June continued. The most-traded SHFE copper contract fluctuated sideways in the range of 102,020-103,070 yuan/mt, never breaching the psychological level of 100,000 yuan/mt, and the end-use wait-and-see sentiment remained. The core issue of structural tightness on the supply side remained unchanged. The aftermath of the compliance inspection on "reverse invoicing" in south China was still being felt, and compliant copper scrap raw materials that could be invoiced remained in short supply. To accommodate the financial pressure on scrap utilization enterprises, suppliers shifted more toward raw material consignment with downstream processors, accepting partial payment upfront with settlement later. This further pushed up the actual turnover cost of raw materials and reinforced their price resilience — even when copper prices dipped mid-week, traders generally held back from selling. Only after copper prices rebounded toward the end of the week did their willingness to sell pick up. Constrained by supply, the price spread between copper cathode and copper scrap fluctuated in only 1,169-1,957 yuan/mt for the whole week. The price spread between copper cathode rod and secondary copper rod stayed at an extremely low level of 130-520 yuan/mt. Due to high raw material costs, secondary copper rod maintained a premium of 200-300 yuan/mt over futures throughout the week. Its own finished product inventories continued to build as sales remained sluggish, which in turn dampened rod producers' willingness to produce and purchase raw materials. Even though the new reverse invoicing rule had been in effect for two weeks, no significant improvement in market trading was observed. The shortage of compliant invoices continued to constrain effective supply release. On the demand side, the dual pressure from the high-temperature off-season and price expectations suppressed activity. New orders at downstream wire and cable enterprises decreased WoW. With copper prices persistently above the 100,000 yuan/mt mark, end-users widely held the wait-and-see expectation of "waiting for a drop below 100,000 before buying," keeping procurement willingness low. Even when the cathode-scrap spread widened to around 1,900 yuan/mt by the end of the week and the theoretical economics of secondary copper rod improved somewhat, rod producers' own finished product inventories remained high, and their restocking willingness stayed subdued. Most purchases throughout the week were just-in-time, with very thin trading. The deadlock showed no sign of breaking, and the subsequent direction still depends on whether copper prices can break below the 100,000 yuan/mt threshold to release end-use demand, and whether the new reverse invoicing rule can further smooth invoice supply and lower compliance costs.