Copper Scrap Transactions Pick up Substantially with Copper Prices Stabilising above 63,000 yuan/mt

SHANGHAI, Aug 31 (SMM) - From August 22 to August 28, the copper scrap throughput of East China Nonferrous Metals City was about 22,000 mt, a week-on-week increase of 29.15%. According to SMM data, the weekly average price of #1 copper cathode was 63,714 yuan/mt from August 22 to 26, an increase of 1,227 yuan/mt or 1.96% over the previous week. The weekly average price of bare bright copper in Linyi Metal City, Shandong Province was 58,220 yuan/mt, up 700 yuan/mt or 1.22% from the previous week. The domestic weekly average spread between copper cathode and scrap stood at 1121 yuan/mt, expanding 422 yuan/mt compared with a week ago.

Most copper scrap traders took profits after copper prices stabilised above 63,000 yuan/mt as a whole last week, and some cargo holders were finally able to clear their inventory stockpiled earlier when prices were high. In addition, in places such as Guixi and Fengcheng city in Jiangxi province, the transportation was restricted due to the pandemic outbreak, and some scrap users were forced to suspend the production due to disrupted scrap supply. Nonetheless, market supply and demand imbalance was repaired to some extent. According to SMM survey, the average operating rate of secondary copper rod producers last week (i.e. from August 20 to 26) was 43.51%, an increase of 2.03 percentage points from a week ago, benefiting from constantly improving scrap supply as well as expanding spread between copper cathode and scrap.

It is expected that the weekly throughput of copper scrap in East China Nonferrous Metal City will contract slightly this week to around 20,000 mt, but the decline will be limited. On the one hand, continuously rallying copper prices have cooled down the terminal consumption to some extent, while the scrap traders once again hold back their cargoes after copper prices have dropped slightly this week. Nonetheless, the demand for copper scrap will improve compared with a week ago thanks to the expanding spread between copper cathode and scrap which makes scrap more popular, as well as the improving pandemic situation in Jiangxi, that the transportation of raw materials will be less restricted.