Rise in Copper Scrap Imports
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.
Shift to Copper Scrap Amid High LME Prices
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.
Market Impact of Copper Concentrate Shortage
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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