Since the fourth quarter of 2025, copper prices have continued to trend higher, repeatedly breaking through previous highs in 2026. Under traditional market logic, elevated copper prices should encourage copper scrap collection and accelerate the release of social inventories. However, recent market conditions show that tradable overseas copper scrap supply has not increased significantly. High-quality material remains tight, while overseas copper scrap payabilities continue to stay elevated.
SMM believes the key reason is that copper prices can influence the timing of scrap releases, but cannot substantially increase the actual generation of copper scrap within a short period.
In terms of supply sources, new copper scrap generation mainly depends on manufacturing operating rates, copper product output and downstream orders. Old copper scrap supply is instead affected by product lifespans, equipment replacement cycles, building demolition activity and the efficiency of local recycling systems. Therefore, even when copper prices rise, they can only encourage material that has already entered the recycling system, as well as part of existing social inventories, to be sold more quickly. Copper-containing products that remain in use cannot immediately be converted into scrap.
Meanwhile, some overseas markets are still in the traditional consumption off-season. Manufacturing orders remain modest, limiting the generation of new copper scrap. Old copper scrap must also go through collection, dismantling, sorting, processing and transportation before reaching the market. As a result, the supply response to higher copper prices usually involves a clear time lag.
More importantly, after continuous releases in previous quarters, the amount of social inventory currently available for sale has declined. According to SMM market research, amid the sustained increase in copper prices from the fourth quarter of 2025 through the second quarter of 2026, part of the inventories previously held by recyclers, traders and end users gradually entered the market and was absorbed by downstream consumers.
Therefore, even if copper prices remain elevated, the amount of additional inventory that can be released is relatively limited. As previous inventories are gradually depleted, future supply will increasingly depend on newly generated material from manufacturing, equipment retirement, building demolition and routine recycling. These sources are unlikely to grow rapidly in the short term. In other words, the marginal impact of high copper prices on copper scrap supply is weakening.
High copper prices have also increased funding pressure across the trading chain. For the same physical volume, higher copper prices require more working capital for procurement and inventory, while also increasing exposure to price volatility. Some traders have therefore reduced speculative stockpiling and shifted towards back-to-back transactions or procurement only after confirming downstream orders. This has further reduced the amount of spot material available for immediate trading and delivery.
In addition, an increase in actual copper scrap generation does not necessarily translate into a corresponding rise in internationally tradable supply. As recycling, smelting and copper processing capacity expands in parts of the US, Europe, India, the Middle East and Southeast Asia, a growing share of copper scrap is being absorbed locally. Stronger competition from domestic smelters, copper rod producers and alloy manufacturers for high-quality material has further reduced the volume available to export markets.
Uncertainty in international transportation has also disrupted normal cargo flows. According to SMM market research, recent tensions between the US and Iran have affected some shipments involving the Middle East and related transit routes. Some cargoes have faced sailing delays, route adjustments or temporary suspension of shipments.
Delivery periods for some contracted cargoes have been extended by one to three months. In certain cases, suppliers have temporarily withheld shipments due to transportation risks, rising insurance costs and uncertainty over future developments. Longer shipping periods not only increase working-capital requirements and fulfilment risks for traders, but also prevent purchased material from being converted into effective supply available to downstream consumers in a timely manner.
Overall, elevated copper prices have indeed encouraged the release of some social inventories and recycled material. However, the impact has mainly taken the form of earlier inventory releases rather than sustained, substantial growth in total copper scrap supply. As previous inventories are gradually depleted, the marginal stimulus from higher copper prices is weakening.
Looking ahead, if copper prices remain elevated, overseas copper scrap collection may continue to increase gradually. Nevertheless, given the reduction in existing social inventories, stronger local absorption, funding pressure caused by high prices and uncertainty surrounding international transportation, a concentrated increase in internationally tradable copper scrap supply remains unlikely in the short term. In particular, the tight supply of high-quality material suitable for direct use in copper rod, alloy and secondary copper production is unlikely to ease quickly, continuing to support overseas copper scrap payabilities.
