NEW YORK Domestic copper
consumers that can use high-grade scrap are "scrambling" to
find out about its availability in the wake of an outage at
Kennecott Utah Coppers Bingham Canyon Mine.
"Weve had some scrap
buying. Those that can take scrap as well as copper cathode are
looking to ramp up their buying," a scrap broker source told
Kennecott, a division of Rio
Tinto Plc, declared force majeure earlier this week
after an April 10 wall slide forced it to suspend mining at the
Utah mine (
amm.com, April 16).
Purchases so far have been
limited as some take a wait-and-see stance, but sellers expect
sales to spike as Kennecotts inventories run down.
"(Some) want to get in before
the spreads get way out of whack," the scrap broker source
The higher demand combined with
lower Comex copper prices served to reduce discounts on
high-grade copper scrap.
The discount for brass mill No.
1 copper scrap has narrowed to 1 to 3 cents per pound below
Comex from a 3- to 5-cent discount a week earlier, putting
prices at $3.16 to $3.18 per pound based on a May-delivery
Comex copper contract settlement price of $3.1875 per pound
The Comex price is down 6.7
percent from $3.418 per pound a week earlier as the market
takes its lead from economic sentiment rather than supply and
demand fundamentals, sources said.
The price decline has led market
participants to predict more trades will take place at a
premium to Comex following one unconfirmed sale by a broker
last week at 2 cents above the July Comex price.
Kennecott customers arent
guaranteed deliveries after May, according to the force
majeure notice. This will mean consumers will continue to
look for alternative sources of feedstock.
Copper cathode inventories in
London Metal Exchange-listed warehouses, while high,
arent a guaranteed source of material, market
participants said (
amm.com, April 18). Queues to get copper out of
approved warehouses in New Orleans are at about five months,
while consumers would have to wait more than a year to get
their hands on material in Detroit warehouses, traders
"Even if warehouse stocks are
high, most agree that it takes way too long to get metal out,"
a second broker said.
Continued scrap supply tightness
helped narrow the discounts on other grades of copper scrap in
the face of declining Comex copper prices and a slightly
improved demand outlook.
The discount on refiners No. 1
copper scrap has declined to 9 to 11 cents per pound from 12 to
14 cents previously, putting prices at $3.08 to $3.10 per pound
vs. $3.28 to $3.20 per pound April 10. The refiners No. 2
copper scrap discount moved to 27 to 29 cents per pound from 30
to 32 cents previously.
"(The discounts) are all coming
in. Supply is pretty darned tight and demand is slightly better
than it was," a third scrap broker said.
Brass ingot makers copper
scrap is following a similar trend, with the discount for bare
bright material falling to 4 to 6 cents per pound from 6 to 8
cents previously, and the discount for brass ingot makers
No. 1 copper scrap at 13 to 15 cents per pound, down from 15 to
Ingot makers are having to
compete with exporters for No. 2 copper scrap, the second
broker said. As a result, the discount for No. 2 narrowed to 27
to 31 cents per pound from 30 to 34 cents previously.