World Scrap Congress: Still Counting on Copper

Orders from China for copper scrap China have plummeted in late 2008, but a copper industry veteran from that nation says the long-term demand fundamentals are still in place.

Speaking at the World Scrap Metal Congress in Shanghai, Wang Ming of Zhejiang Hailiang Co. cited an analysis by Brook Hunt that in the next 13 years, “the average annual increase of copper consumption in China will be 7.4 percent.”

Acknowledging current economic woes, Wang nonetheless predicted that “a setback will not influence copper consumption too much.” He added, “The continuous developing economy of mainland China is urging the consumption of copper in industries like electric power, marine engineering, electric communications, automobiles, etc.”

In the power sector, Wang remarked, “The overall investment in constructing and rebuilding of the national power line in the 11^th five-year period will reach RMB1434 billion. “As the electric power industry occupies about 50 percent of the national copper consumption, [China’s] overall copper consumption will be driven by the rebuilding and newly-established [grid], and will be increasing for a relatively long period.”

The world’s copper scrap has been helping to fuel the growth. China has nearly tripled its consumption of copper scrap in five years. According to the Beijing China Non-ferrous Recycled Metal Research Institute, from 420,000 tons in 2003 to more than 1.1 million tons in 2007.

Scrap provides one-third of the feedstock tonnage for the copper that is eventually consumed in China, said Wang, who noted that the scrap is often processed at recycling parks in cities such as Ningbo, Nanhai and Jinghai. The scrap is melted in electro-refining facilities, casting facilities and brass mills.

Economic conditions in the rest of the world are having an impact on copper pricing, according to Wang. “Rebounding of the U.S. dollar and the gloomy future of the economy in America and Europe has resulted in the recent crash of commodity prices,” he commented.

Wang also referred to Chinese government policies “to prevent the overheating of the economy” such as strictly controlled bank loans that may.”

He predicted, though, that “the high copper price will get back in a short time.” Although orders declined dramatically this fall, Wang says buyers will be back. “We think that for the long term, the demand is [solid], once the price of the vendor and the buyer could be balanced, the demand will be released,” he stated.

The World Scrap Metal Congress, organized by Terrapinn Pte Ltd., was held in Shanghai Nov. 3-4, 2008.