This week (July 13-16), the copper scrap market operated under a triple framework of copper prices retreating after rapid rises, ongoing reverse-invoicing compliance constraints, and deepening high-temperature off-season. The most-traded SHFE copper contract surged to 105,020 yuan/mt mid-week, up nearly 2,000 yuan/mt from the start of the week. However, copper scrap prices were supported by compliance costs and suppliers holding prices firm, so the weekly price fluctuation was less than 1,000 yuan/mt. The price spread between primary metal and scrap widened from 2,445 yuan/mt at the start of the week to 3,923 yuan/mt, up more than 2,200 yuan/mt from the previous weekend. The widening spread was entirely driven by the unilateral rise in copper cathode. The resistance of copper scrap to decline was a key supply-side feature this week, which directly spurred hedging-related purchase demand from secondary copper rod enterprises.
The supply side continued the structurally tight pattern seen since 2026. The first underlying constraint was reverse-invoicing compliance requirements: aftershocks from compliance inspections in Jiangxi and Hubei in south China persisted, and invoice quotas remained restricted in Shuyang, Jiangsu, leaving available compliant and deductible copper scrap persistently tight. The second was that after Document 770 eliminated irregular local tax rebates at the end of 2025, small and medium-sized copper scrap traders that previously relied on subsidies were continuously exiting the market, and overall available supply contracted markedly compared with the same period in previous years. Additionally, suppliers generally held a psychological defense of not selling cheap before copper prices break below 100,000 yuan/mt, and the selling pace throughout the week closely followed copper price fluctuations. At the start of the week when copper prices pulled back, strong hold-back sentiment prevailed, and tight supply left secondary copper rod enterprises struggling to find low-priced material. In mid-week when copper prices surged above 105,000 yuan/mt, suppliers’ willingness to sell at fixed prices increased, but because downstream scrap-using sectors had weak orders in the off-season and low acceptance of high prices, sales did not occur in large volumes. Most material was purchased by secondary copper rod enterprises using a hedging logic of buying raw material and shorting futures, not for actual production restocking. Many rod enterprises stopped pricing directly after purchasing enough to meet daily demand in the morning session and did not chase higher prices to buy. At the end of the week copper prices consolidated and pulled back, suppliers switched back to hold-back mode, and supply tightened again.
Regional divergence persisted. In south China, due to compliance costs and slow capital turnover, bare bright copper purchase prices were 400-600 yuan/mt lower than in the north, maintaining the unusual structure of different prices for the same material. Traders maintained a low-inventory strategy of quick turnover, not daring to stockpile and bet on rising prices. The issue of payment collection cycles extending beyond two weeks remained unresolved, further limiting the release of supply elasticity. The demand side remained overall weak, with secondary copper rod enterprises reporting scarce new orders throughout the week. The price difference between copper cathode rod and secondary copper rod surged to 1,510 yuan/mt mid-week, touching the critical line of economic viability, but lacked sustainability and pulled back to 950 yuan/mt by the week's end. Meanwhile, secondary copper rods remained at a premium to copper futures due to rigid raw material costs. New orders at terminal wire and cable enterprises were weak, and they still held wait-and-see expectations that "copper prices have further downside room," with procurement mainly driven by rigid demand in pulses. Throughout the week, copper scrap transactions were largely driven by copper price fluctuations and hedging demand, while restocking volume for actual production was minimal. After copper prices pulled back at the week's end, rod enterprises' purchase willingness weakened further. The market displayed a weak equilibrium where "when copper prices rise, suppliers sell and rod enterprises collect for hedging; when copper prices fall, suppliers hold back and rod enterprises wait for lower prices." Currently, the market remains constrained by the dual restrictions of compliant invoices and off-season demand. Going forward, if the price difference between primary metal and scrap stabilizes above 1,500 yuan/mt and the implementation rules for reverse invoicing become clearer, this may trigger the release of some rigid demand; otherwise, the weak transaction pattern will persist.
![Price spread between futures contracts constrains spot copper performance; futures weaken while discounts hold steady [SMM North China spot copper]](https://imgqn.smm.cn/usercenter/ieria20251217171709.jpg)
