The Copper Battlefield

A scrap broker who addressed attendees at an international scrap convention referred to the copper market as “much like a battlefield” that is becoming more complicated as copper makes its way to different parts of the world.

Speaking to attendees of the Nonferrous Division meeting at the Bureau of International Recycling (BIR) Spring Convention in Monte Carlo, Simon Mao of Shanghai Dachang Copper Ind. Co. said the conflicts between brokers, dealers, traders and end users “often make business more complicated than before,” adding that it had become more difficult to manage the supply chain and overseas purchasing agents.

Despite the complications, a pattern toward greater Chinese consumption seems clear. Mao noted that China’s copper scrap imports reached an all-time high of 3.3 million metric tons last year, with more than 90 percent of that scrap coming from the U.S., Hong Kong, Japan and western Europe. Demand will continue to grow over the next five years, leading to increasingly tough competition for material on the international markets, added Mao. He singled out the birch/cliff and berry/candy grades as being in particular demand.

The U.S. can ship scrap copper in part because it has lost more than 275,000 short tons of domestic annual No 2 copper consumption in the last seven years, according to Glen Gross, CEO of Pittsburgh-based Wimco Metals. There are no longer any No. 2 copper secondary smelters in the U.S., said Gross, and China has emerged as the major outlet for No 2 scrap, followed by South Korea and Germany.

Gross commented that U.S. shippers have adjusted their No 2 shipments with respect to quality, form and conveyance, while paperwork has also become more complex. “There has been too much confusion for suppliers as to the quality demands of their new foreign users,” he remarked. “At some point, foreign consumers need to issue detailed specifications for acceptable product. The nebulous terms ‘birch/cliff’ and ‘No 2 copper minimum 94%’ need to be more clearly defined by each consumer.”

Gross also pointed to the potentially huge impact on international markets of an increase in copper prices and, therefore, copper scrap generation. “In the 1990s it was eastern European scrap that flooded international scrap markets, and in the 2000s it could be American scrap,” he warned.