U.S. copper scrap traders said Friday, Jan. 9, the domestic market remained tight, though spreads to top-buyer China had widened with more material flowing into the market before the Asian New Year holiday later this month.
Merchants said that overall scrap prices have risen in tandem with the massive recent gains in COMEX copper futures, and spreads could widen further as high prices attract more material to the market.
"The scrap flow is relatively stable, but the rise in prices may bring out marginally more copper," one Northeastern trader said.
Many of the inventories in the United States have been sold as red metal prices have risen, he added. "Futures going up to $1.10 a lb caught a lot of people off guard."
Traders quoted high-quality No. 1 "barebright" copper scrap at flat to 1 cent below copper for March delivery on the COMEX division of the New York Mercantile Exchange.
Prices for No. 2 scrap were 9-10 cents below COMEX, while No. 1 "burnt" grade was pegged at 1.5 to 3 cents below March.
COMEX March copper futures eased 0.50 cent on Friday to settle at $1.1035.
March copper hit a 6-1/2 year high Thursday at $1.11 a lb in a broad rally amid strong Far Eastern demand and global supply tightness, but then gave back some gains Friday.
In scrap, traders said supplies continued to be tight in the United States, due to less material in the market after several years of slower manufacturing.
"But I would say that copper scrap has started to flow somewhat because of the higher prices seen recently," said a Midwestern trader.
"A lot of dealers at year end were probably reluctant to sell their metal. They probably had a pretty good year with nonferrous prices being as strong as they were, so they're freeing up some of that metal in the warehouses heading into the new year," the trader said.
Robust consumption from China, the largest buyer of metals currently, was seen to be beneficial to metal scrap prices.
China imported $1.38 billion worth of U.S. scrap metal in 2003, with $400 million worth of copper scrap. Reuters