LONDON High-grade copper
scrap prices are trading at a premium to Comex tags in the U.S.
market following a sharp swing lower in refined metal prices,
sources told AMM sister publication Metal
Bulletin at the Center for Copper and Mining Studies
annual Cesco Week in Santiago, Chile.
Spot copper prices slumped to
$3.3255 per pound on Comex last week, the lowest point since
June, as funds built record short positions in the U.S. copper
On the London Metal Exchange,
prices dipped below $7,400 per tonne earlier this month, down
nearly $1,000 from this years highs in February.
The sharp drop in prices over
the past two months, which has coincided with a dramatic rise
in visible cathode inventories, is already having an impact on
scrap prices and some sources said certain grades have traded
as much as 1 cent above Comex prices.
"We are at that point now with
prices where scrap supply is starting to be withdrawn from the
market and in some cases is even trading at a premium," a
producer source said.
AMMs copper scrap
discounts have tightened considerably in recent weeks as market
participants said the combination of weakening terminal markets
and an ongoing supply crimp was squeezing the market, with
brass mills No. 1 copper scrap narrowing to 3 to 5 cents
below Comex April 3 from a 4- to 6-cent discount a week earlier
amm.com, April 4).
"I have not seen a premium, but
we have sold bare bright copper at close to Comex on a
delivered basis. There is virtually no material available," one
U.S. scrap trader said.
While prices have fallen, it
still puts a considerable strain on working capital
requirements for copper scrap merchants, and holding back
material for long stretches can cause cash flow problems for
"Prices might be lower, but
youve still got to have deep pockets to hold out," one
scrap buyer told Metal Bulletin in Santiago.
In the European market, copper
scrap supply can tighten in a knee-jerk fashion if the price
falls quickly, but offers for material re-emerge shortly
afterwards as working capital strains encourage suppliers to
release material, Peter Willbrandt, chief executive officer of
Hamburg, Germany-based Aurubis AG, said last month. "If the
copper price drops a few hundred dollars then there is a
reaction, but typically it is only for a few weeks and then it
normalizes," he said.
A version of this article
was first published by AMM sister publication Metal