China’s Copper Scrap Imports Drop Amid Narrowing Price Spreads

Decline in Copper Scrap Imports
China’s copper scrap imports fell by 5.4% in September, a trend largely driven by a narrowing price spread between refined copper and copper scrap. The price gap, which had been more than 2,000 yuan per ton in early August, shrank to around 1,200 yuan per ton ($169 per ton) by the end of the month as copper prices hit their lowest point in five months. This contraction in price spread led to reduced demand for scrap from Chinese copper smelters and secondary producers.

Impact of Price Spreads on Purchasing Behavior
The narrowing price spread significantly impacted purchasing decisions within the market. Fabricated product producers, who are primary buyers of copper scrap, became less interested in purchasing scrap once the spread fell below a critical threshold of 1,400 yuan per ton. As a result, many Chinese smelters chose to refrain from buying copper scrap, while sellers were also hesitant to deliver, anticipating better prices in the future. This combination of reduced purchasing and hesitant selling led to lower scrap availability in the market during September.

Shift to Copper Scrap as a Substitute for Copper Concentrate
Despite the September decline in copper scrap imports, China’s cumulative imports for the year (January-September) increased by 16%, as producers turned to copper scrap as an alternative to copper concentrate. The rising costs of copper concentrate, driven by an ongoing supply shortage, pushed many producers to use copper scrap to meet their production needs. However, this shift also came with challenges, as the treatment and refining charges (TC/RCs) for copper concentrate dropped dramatically, falling by 85% over the same period.

Outlook for the Copper Market
Given the volatile price trends in the copper market, China’s copper trade dynamics are expected to continue fluctuating. Buyers and producers will need to adapt to changing market conditions, especially with narrowing spreads and rising costs, which will influence copper scrap imports and the overall copper supply chain.