((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Pratima Desai and Julian Luk
Chinese imports of scrap copper have soared due to shortages of concentrates that are turned into the refined metal used in the energy and construction industries, but record high prices mean U.S. shipments will likely make a dent. break.
Chinese smelters, large consumers of copper, have faced concentrate shortages since last year, when First Quantum FM.TO lost the right to operate its Cobre mine in Panama, which accounted for 1% of supply worldwide in 2022.
Chinese imports of copper scrap and scrap overall increased by 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 China’s scrap imports from the United States jumped 37% to 153,059 tonnes between January and April this year, compared to the same period last year.
The price of copper scrap from the United States is below the price of CME HGc1, which reached a record $5.1985 per pound or $11,460 per ton on May 20, as parties who had sold contracts to term were forced to buy them back or roll over their positions.
“Chinese buyers are postponing shipments of U.S. copper scrap,” said a source at a Chinese trading company, adding that China’s main scrap supplier was the United States.
The source said some Chinese buyers were seeking to price US scrap against copper on the London Metal Exchange (LME), which trades at a lower price than the CME.
Deteriorating production at other mines, often in Latin America, has exacerbated concentrate shortages and Chinese smelters have imported more copper scrap to fuel their furnaces and protect margins.
China is home to half of the world’s copper smelters and is the largest buyer of raw materials, including concentrates and scrap.
Waste represents around 9 million tonnes, or roughly 30% of the world’s copper supply each year.
“Due to the concentrate shortage, copper smelters are processing more scrap and blister,” said Macquarie analyst Alice Fox.
“Given the cost of physical collection and processing, during periods of significant price fluctuations, scrap tonnages on a contained copper basis can vary by up to a million tonnes per year, effectively rebalancing the market for periods of high or low prices
Macquarie expects the gap between copper supply and demand to widen to 1.6 million tonnes in 2030, compared to a shortfall of around 86,000 tonnes this year.
