Prices of Copper Scrap Exceeded Copper Cathode for the First Time This Year

SHANGHAI, Aug 24 (SMM) – Prices of copper scrap exceeded copper cathode for the first time of the year last Thursday by 105 yuan/mt, according to SMM data. After-tax prices of bare bright copper exceeded that of copper cathode.

The sharp gains in raw material prices pushed copper rod plants using copper scrap as feedstock into severe losses, with some plants ceasing production two weeks ago. Tight supply and high prices of copper scrap will depress consumption of copper scrap by the smelting and processing end, and will boost copper cathode consumption. Copper scrap would be offered for sale after copper prices stabilise, which will improve supply. But copper scrap supply shortages are unlikely to be fixed in the second half of the year, boosting consumption of copper cathode.

According to the Customs, China imported 149,400 mt of raw materials for secondary copper and brass in July, a month-on-month decline of 0.72%. YTD imports through July stood at 970,700 mt, an increase of 91.95% year on year. The month-on-month decrease in July was in line with expectations. Malaysia reinstated lockdowns amid the raging pandemic across Southeast Asia, Europe and the United States, reducing overseas supply. The resulting higher quotes coupled with strict customs inspections, extension of customs declaration period and increased container refusals have depressed the enthusiasm of enterprises to import.

Producers of copper-zinc alloy billet reported that prices of imported brass copper scrap have exceeded domestic prices for an extended period and they have been producing mainly with domestic brass copper scrap since June. The impact of the pandemic on overseas supply of raw materials for secondary copper and brass will continue, which is unlikely to improve in the short term.

Prices of #1 bare bright copper without invoices averaged 64,030 yuan/mt last week, down 720 yuan/mt from the previous week. The average price spread between copper cathode and copper scrap shrank 538 yuan/mt to 253 yuan/mt. For copper scrap, cif quotes for #1 copper scrap were Comex December copper less $0.19-0.195/lb, and offers for birch/cliff were Comex December copper less $0.32-0.33/lb. US brass was quoted at $6,000-6,050/mt. The coefficient for #2 copper granules against LME copper stood at 95.5-96% on a cif basis, and the coefficient for bare bright copper against LME copper at 99-99.5%, on a cif basis. The coefficient for copper scrap rose amid continued declines in LME copper prices.