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Smelters in top copper consumer China 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 mined supply in 2022.
China's copper waste and scrap imports overall climbed 25% to
783,004 tons 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 China's scrap imports from the United States
jumped 37% to 153,059 tons in January to April this year from
the same period last year.
Copper scrap from the U.S. is priced at a discount to the CME
price, which hit a record $5.1985 a lb or $11,460 a ton on May
20 due to parties which had sold futures being forced to buy
them back or roll over positions.
"Chinese buyers are deferring U.S. copper scrap shipments," a
source at a Chinese trading firm said, adding that China's top
scrap supplier was the United States.
The source said some Chinese buyers were looking to price U.S.
scrap against copper on the London Metal Exchange (LME), trading
at a discount to CME prices.
Deteriorating production at other mines, many in Latin America,
has exacerbated concentrate shortages and Chinese smelters have
imported more copper scrap 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 accounts for about 9 million tons or roughly 30%
of global copper supplies annually.
"Due to concentrate tightness 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 movement, scrap tonnages on a
contained copper basis can move by up to one million tons per
annum, effectively rebalancing the market during periods of high
or low prices."
Macquarie expects the gap between copper supply and demand to
widen to 1.6 million tons in 2030 from a deficit around 86,000
tons this year.
(Reporting by Pratima Desai; Editing by Ros Russell)
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