China’s scrap copper imports have soared due to a shortage of concentrate being processed into refined metal used in the energy and construction industries, but record high prices mean US shipments are likely to stall.
Smelters in top copper consumer China have faced a shortage of concentrates since last year when First Quantum lost the right to operate the Cobre mine in Panama, which accounts for 1% of global mining supply in 2022.
China’s overall copper waste and scrap imports rose 25% to 783,004 tons in the first four months of this year compared with the same period in 2023, according to the Trade Data Monitor (TDM).
TDM data also shows that Chinese scrap imports from the United States jumped 37% to 153,059 tons in the January-April period this year compared to the same period last year.
Scrap copper from the United States is priced at a discount to the Chicago Mercantile Exchange price, which hit a record high of $5.1985 per pound, or $11,460 per ton, on May 20 because parties that sold futures contracts were forced to buy them back or roll over their positions.
“Chinese buyers are delaying US copper scrap shipments,” a source at a Chinese trading company said, adding that China’s largest scrap supplier is the United States.
Some Chinese buyers are looking to price US scrap for copper on the London Metal Exchange (LME), where it trades at a discount to CME prices, the source said.
Declining production at other mines, many in Latin America, has exacerbated the concentrate shortfall, and Chinese smelters have imported more scrap copper to feed their furnaces and protect their margins.
China is home to half of the world’s copper smelters and the largest buyer of raw materials including concentrates and scrap.
Scrap typically represents about 9 million tons or approximately 30% of global copper supply annually.
“Because of the narrow focus, copper smelters are processing more scrap and blisters,” Macquarie analyst Alice Fox said.
“Due to the cost of collection and physical processing – during periods of significant price movement, tons of scrap based on contained copper can move up to 1 million tons per year, effectively rebalancing the market during periods of high or low prices.”
Macquarie expects the gap between supply and demand for copper to widen to 1.6 million tons in 2030 from a deficit of about 86 thousand tons this year.
– Pratima Desai and Julien Locke, Reuters
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