Secondary copper supply tightened at week-end

SHANGHAI, May 25 (SMM)—Bare bright copper supply was ample early last week as suppliers increased supply two weeks ago. Scrap users purchased aggressively. The big declines in copper prices at the end of the week bolstered speculations operations. Traders restocked in anticipation of price rebound. This combined with suppliers holding back cargoes amid price declines tightened available cargoes. Some scrap users with insufficient raw material inventory purchased at high prices, limiting price declines for secondary copper. This narrowed the price spread between copper cathode and copper scrap, affecting secondary copper consumption. Hedge traders continued to sell at lower prices at low discounts of copper rods produced with secondary copper, reducing orders at plants. SMM expects available cargoes to improve this week as sellers face cash flow issues and great risk of copper price volatility.

China imported 167,800 mt of secondary copper (brass) in April, down 2.46% from March. 76,400 mt was imported from Malaysia, Japan, and the United States, down 12.15% on the month, accounting for 45.53% of the total; total imports from January to April stood at 531,500 mt, an increase of 81.78% year-on-year. Domestic supply of copper scrap remained tight, relying on imported cargoes. Demand for copper scrap will strengthen amid distribution of vaccines overseas and economic recovery. As such, tighter overseas supply and firm prices will result in import losses, hampering growth in secondary copper imports. Imports of secondary copper are expected to stand at 150,000-180,000 mt in May.

Prices of #1 bare bright copper without invoices averaged 67,210 yuan/mt last week, down 1,900 yuan/mt from the previous week. The average price spread between copper cathode and copper scrap widened 378 yuan/mt to 1,773 yuan/mt. For copper scrap, cif quotes for #1 copper scrap were Comex September copper less $0.18-0.19/lb, and offers for birch/cliff were Comex September copper less $0.33-0.35/lb. US brass was quoted at $6,300-6,450/mt. The coefficient for copper granules (98%) against LME copper stood at 93.5% on a cif basis, and the coefficient for bare bright copper against LME copper at 96.5-97%, on a cif basis.