Nonferrous Scrap, China

Copper prices took a nosedive in early August and fell to the lowest point during the year—a heavy blow to scrap merchants. Some goods were refused due to high shipping costs. The market supply is extremely tight. Manufacturers are having difficulty purchasing scrap material, which can only mean reduced capacity. With the fall season approaching, copper scrap prices began to climb up slowly. Scrap recyclers have begun to operate, while deals slowly turned for the better, but supply was still hard to find.

Earlier in August, as a response to the copper rebound, copper scrap buyers were willing to improve spot purchase prices, although the adjustment was very rapid, taking people by surprise.

Recently, five departments of the Ministry of Environmental Protection jointly issued the “Management Practices for Import of Solid Scrap." In the short term, it will impact the speed of scrap metal imports. The industry expects that the copper supply will continue to be tight in the short term, while import costs will improve. Thus, holders asked for firm prices on the goods at hand. In middle of August, Shanghai Futures Exchange (SHFE) copper pricing rebounded, driving higher spot prices. Scrap processors and holders showed reluctance to sell goods. Supply shortages and a good market outlook is expected.

There is a belief that electrolytic copper consumption is quietly improving. September may be a turning point with the long-awaited arrival of the peak season price scheduled. In view from the current market conditions, copper will continue to trade in a stalemate range. The industry in general is concerned about regulatory developments concerning customs on imported scrap.

Brass is still quite buoyant. Buyers have created a substantial market to chase the brass scrap. It is reported that factory orders for brass are better.

Earlier in August, domestic prices of aluminium ingot metal fell sharply because of the overall metal and financial market bearish sentiment. Many market participants believe the recent fast rise in aluminium prices will actually give the market a callback opportunity. Aluminium ingot is still sought after and is a market-driving force. In the case of cumulative decline, aluminium users are prepared to enter the market for purchases.
SHFE aluminium funds continue to flee. Late in the month, aluminium makers’ orders finished at uneven levels. Although the aluminium market trend is still far from satisfactory, most market participants still have expectations of aluminium pricing displaying some growth, which is mainly from the continued short supply of aluminium ingots.
Since early August, zinc prices showed weakness. In just 10 days in Foshan, zinc prices were down by more than 2,000 yuan per ton. And then, many central banks began to take joint measures to stabilize the market. The market also welcomed the opportunity to buy low. Whether speculators, traders or manufacturers joined with the ranks of bargain-hunters, it drove significant improvement in the market, followed by the futures market rebound, along with higher zinc prices.

Upstream, the zinc smelters appeared to be in a darker mood, mainly because of the rainy season being shorter this year. This creates a substantial decline in generating capacity and electricity load in summer, limiting corporate power use. This led to a decline in output, coupled with the current zinc ingot prices falling sharply.

Since early August, a quick and substantial decline in nickel prices has made the market increasingly pessimistic. Panic increased among the majority of traders. According to some scrap traders, a continuous sharp decline in bulk metals prices means recyclers’ pessimism continued to increase.

Since mid-August, 200 series stainless steel scrap performance has been quite stable. The low-nickel 200 series stainless steel market has continued in a steady state of operation while the market prices of resources remain stable. Given the price, it was difficult to move some material. Scrap steel purchases appear to be relatively more cautious, and purchases are very limited.

This report has been prepared by TopRecycle, a market information company found on the Web at www.TopRecycle.com.