Imports of copper scrap into China have surged due to shortages of concentrate, which is turned into refined metal used in the energy and construction industries, but record prices mean U.S. shipments will likely grind to a halt.
Smelters in China, the top copper consumer, have faced concentrate shortages since last year, when First Quantum lost the right to operate its Cobre mine in Panama, which accounted for 1% of global supply mined in 2022.
Imports of copper waste and scrap into China overall rose 25% to 783,004 tonnes in the first four months of this year compared to the same period in 2023, according to Trade Data Monitor (TDM).
TDM data also shows that Chinese scrap imports from the United States jumped 37% to 153,059 tonnes in the January-April period this year compared to the same period last year.
Copper scrap from the United States is priced at a discount to the CME price, which hit a record high of $5.1985 a liter or $11,460 a ton on May 20, as parties who had sold futures were forced to buy them back or roll positions.
“Chinese buyers are postponing US copper scrap shipments,” a source at a Chinese trading firm said, adding that China’s main scrap supplier is the United States.
The source said some Chinese buyers are trying to price US scrap against London Metal Exchange (LME) copper, which is trading at a discount to CME prices.
Deteriorating production at other mines, many of them in Latin America, has worsened concentrate shortages, and Chinese smelters have imported more copper scrap to fuel their furnaces and protect their margins.
China is home to half the world’s copper smelters and is the largest buyer of raw materials, including concentrates and scrap.
Scrap typically accounts for about 9 million tons or about 30% of global copper supplies per year.
“Due to the shortage of concentrates, copper smelters are processing more scrap and blisters,” said Alice Fox, an analyst at Macquarie.
“Given the cost of physical collection and processing – during periods of significant price movement, tonnes of copper-based scrap can move up to a million tonnes per year, effectively rebalancing the market during periods of low prices. high or low.”
Macquarie expects the gap between copper supply and demand to widen to 1.6 million tonnes in 2030, from a deficit of around 86,000 tonnes this year. (Reporting by Pratima Desai; Editing by Ros Russell)
