High copper prices in the background of the “copper scrap” market attraction rise

According to foreign media reports on June 18, China’s copper scrap imports have increased significantly recently due to the shortage of copper concentrate supply. However, U.S. copper scrap exports to China could be at risk of suspension due to record high copper prices.

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Chinese smelters have faced a shortage of concentrate since 2023, when First Quantum Minerals lost the right to operate the Cobre copper mine in Panama. The Cobre copper mine had accounted for 1% of the global supply of mined copper, and the decline in production from other mines has further exacerbated the shortage. To cope with this challenge, Chinese smelters have increased the import of copper scrap. According to statistics, the first four months of copper scrap imports increased by 25% year-on-year, of which copper scrap imported from the United States is up 37%.

U.S. copper scrap prices compared to the Chicago Mercantile Exchange copper futures prices are cheaper, which makes Chinese buyers of U.S. copper scrap has a strong interest. However, recently Chinese buyers have begun to delay shipments of U.S. copper scrap and have sought to use the London Metal Exchange copper price as a pricing benchmark. This is because the LME copper price is cheaper and meets the cost considerations of Chinese buyers.

Against the backdrop of high copper prices, China’s increased copper scrap imports have had a multifaceted impact on the market.

Positive aspects

  • the rise in imports of copper scrap helps to improve the efficiency of resource utilization, reducing the exploitation of primary copper resources, thus alleviating the resource constraints to a certain extent.
  • reduce production costs. The reprocessing cost of copper scrap is usually lower than the mining and smelting cost of primary copper, which in turn improves competitiveness.
  • the recycling of copper scrap helps to reduce environmental pollution and energy consumption, in line with sustainable development and environmental protection requirements.
  • in the context of high copper prices, the increase in copper scrap imports provides more alternative raw materials for the market, which helps stabilize copper market prices and prevent excessive price volatility.
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However, the increase in copper scrap imports has also brought some

potential challenges

  • Changes in fine scrap spreads may adversely affect fine copper de-stocking and price stabilization.
  • the rise in copper scrap imports may reduce the import demand for refined copper to a certain extent, thus affecting the supply and demand balance of the global copper market.
  • with the increase of copper scrap recycling, the copper market structure may change, the primary copper industry has a certain impact, need to pay attention to the adjustment of industrial structure and transformation and upgrading.
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In summary, in the context of high copper prices, China’s increase in copper scrap imports on the market has both positive impacts and potential challenges. The government and enterprises need to pay close attention to market dynamics and take measures to maintain market stability and sustainable development. At the same time, attention also needs to be paid to the adjustment and transformation and upgrading of the industrial structure in order to adapt to market changes and promote the healthy development of the copper industry. (ccmm.cn)

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