High copper prices and raw material shortages constrain each other, with overseas copper scrap coefficients remaining stable [SMM Weekly Review on Secondary Copper Raw Materials Outside China]

SMM, September 24:

This week, LME copper prices showed a pattern of swinging wildly at highs. LME copper opened at $14,570/mt on Monday, then shot up before pulling back mid-week and consolidating around $14,600/mt. As for copper scrap prices, the LME payable indicator for overseas copper scrap remained generally stable this week, with no notable adjustments despite copper price fluctuations.

Currently, both the upside and downside room for the overseas copper scrap LME indicator is somewhat constrained. On one hand, overseas copper scrap supply remains tight, with limited available cargo in the market, and some downstream enterprises have stockpiling demand ahead of China's National Day holiday, providing some support for the payable indicator. On the other hand, with copper prices staying high, downstream consumers' acceptance of the current copper scrap payable indicator has approached a stage high, leaving relatively limited room for further price increases. Under the combined influence of both sellers and buyers, the overseas copper scrap LME indicator has remained stable at highs recently.

In terms of transactions, with China's National Day holiday approaching, some downstream enterprises have restocking demand before the holiday, and with copper prices rising early in the week, overseas suppliers' willingness to sell increased somewhat. However, with absolute copper prices and the copper scrap payable indicator both at highs, downstream enterprises face high procurement costs and have limited willingness to actively increase inventory, leaving overall market trading sentiment sluggish. In addition, spot premiums for copper cathode have continued to climb recently, causing significant disagreements between buyers and sellers who reference spot copper cathode prices in copper scrap pricing, making some deals difficult to reach and further limiting trading volume in the market.

Looking ahead to next week, as China enters the National Day holiday, procurement activity by some downstream enterprises is expected to slow down, and trading in the overseas copper scrap market may turn quieter. In terms of the payable indicator, with tight supply and low inventory providing downside support, while high copper prices and downstream procurement costs limit further upside, the overseas copper scrap LME indicator is expected to remain stable at highs, with little notable adjustment in the short term.