Analysis of Copper Scrap Market Operations in May 2026: Supply-Demand Deadlock and Structural Contradictions amid High Volatility
In May 2026, China's copper scrap market, under the dual impact of wild swings in copper prices and structural factors within the industry, exhibited overall operating characteristics of weakness on both the supply and demand sides, sluggish transactions, and intensifying standoffs. The core market contradiction shifted from simple price negotiations to deep-seated structural constraints triggered by fiscal and tax policies, capital turnover, and regional disparities.
Early Month: High Copper Prices Stimulated Supply, but Demand Response Was Weak
After the Labour Day holiday, copper prices surged rapidly from 102,750 yuan/mt to 108,440 yuan/mt. The sharp price increase significantly boosted suppliers' selling sentiment and strengthened their willingness to sell. However, downstream secondary copper rod enterprises generally adopted a cautious wait-and-see attitude in the face of elevated absolute prices, and purchase willingness did not follow suit, resulting in a situation of "prices without transactions" and only moderate actual deals. The release on the supply side failed to effectively translate into circulation due to limited overall operating rates among downstream enterprises and unloading delays caused by concentrated logistics, instead pushing up social inventory. The market pricing system became chaotic, with the deduction range for tax-inclusive bare bright copper fluctuating within a wide band of 800–1,200 yuan/mt, reflecting the predicament of lacking solid transaction anchors. Meanwhile, affected by disparities in the implementation of the "reverse invoicing" policy, the northern and southern markets became fragmented. Northern enterprises had faster payment cycles than those in south China, causing south China yards to push for lower prices to shift capital costs, with south China purchase prices for bare bright copper generally 400–600 yuan/mt lower than those in the north.
Mid-to-Late Month: Wild Swings in Prices, Structural Contradictions Became Prominent
Entering mid-to-late May, copper prices shifted into wild swings, with daily fluctuations often exceeding 1,000 yuan. The intense price volatility intensified divergences in market expectations. When copper prices fell, some secondary copper rod enterprises restocked on dips, but most suppliers chose to hold prices firm and hold back from selling, tightening market circulation. When copper prices rebounded on news-driven stimuli, downstream enterprises remained unusually calm, judging the rebound to lack demand support, and purchase sentiment declined rather than rose. Throughout the month, the market never formed consensus expectations, and transactions remained sluggish. More critically, structural constraints became concentrated at month-end: the continuation of "reverse invoicing" and "rectification of invoicing economy" campaigns caused an increasing number of secondary copper rod enterprises to face severe shortages of input invoices, directly threatening production continuity and suppressing raw material procurement capacity. At the same time, downstream payment collection cycles generally extended to over two weeks, exacerbating traders' inventory and capital pressures. During specific periods, some enterprises with rigid demand were forced to pay premiums to secure supplies but often demanded longer credit terms; although traders were concerned about payment collection safety, they still chose to close deals under the attraction of high prices, indicating that capital strength was reshaping the market's transaction structure. Markets Outside China: Payable Indicators Remained Firm, Decoupling from Copper Price Fluctuations
Notably, despite wild swings in China's copper prices in May, payable indicators (discount rates) for copper scrap outside China remained broadly firm, exhibiting a pattern of "following prices up but not down." The mainstream transaction discount rate for bare bright copper held steady at around 98.5%. The more notable change was in No. 2 copper, whose transaction coefficient climbed steadily from around 95% at the beginning of the month to 96%-97%. This was primarily attributable to precious metal by-products such as gold and silver contained in No. 2 copper, whose premiums underpinned the value of the copper scrap itself against the backdrop of strengthening global precious metal prices.
Market Outlook: Stalemate Hard to Break Under Multiple Constraints
From the perspective of key price spread indicators, wild swings in the price difference between primary metal and scrap and the price spread between primary metal and scrap rod reflected the lag in copper scrap price adjustments relative to copper cathode, as well as a lack of sustained momentum to follow prices higher amid weak demand. Looking ahead, under the pattern of "high prices, high inventory, and weak demand," compounded by invoice shortages and capital turnover pressures, the stalemate of weak supply and weak demand in the copper scrap market is unlikely to be fundamentally reversed in the short term. Upside in prices is constrained by end-user acceptance, while downside is supported by costs, and the market is expected to continue to hover at highs with cautious positioning. Ex-China, against the backdrop of overall tight copper scrap supply and China's policy impact on import demand, the pattern of firm payable indicators is expected to persist, and the traditional negative correlation of "copper prices surge, coefficients decline" is unlikely to re-emerge in the short term.
