China experienced a significant rise in copper scrap imports in July, with volumes increasing by 14.8% from the previous month. This growth was primarily fueled by a reduction in import arbitrage losses, which had previously discouraged buyers. The arbitrage loss narrowed to between -Yn1,000 and -Yn1,500 per tonne in June, down from nearly -Yn6,000 per tonne in May, creating more favorable conditions for imports.
Earlier this year, copper prices on the London Metal Exchange (LME) soared to a record high of $11,104.50 per tonne, making copper concentrate a less affordable option for Chinese producers. As a result, many producers turned to copper scrap as a more cost-effective alternative, driving a 20% increase in imports during the first half of the year.
The persistent shortage of copper concentrate further affected the market, causing treatment and refining charges (TC/RCs) to plummet by 88% from January to June. In addition, the removal of a tax rebate on August 1 encouraged secondary copper processors to rely more on copper scrap, even with full tax rates. This trend is expected to persist, supported by improved arbitrage conditions observed in July.
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