LONDON European copper scrap supply remains tight despite rebounding copper prices since mid-April, market sources said.
Intensifying competition for material and lower overall scrap generation is keeping Europes copper scrap supply constrained, traders and consumers told AMM sister publication Metal Bulletin May 21.
Global copper scrap supply fell in April as prices dropped 11 percent on the London Metal Exchange. However, dealers in Europe havent yet released significant volumes of scrap back into the market following the recent price rebound, sources said.
Three-month copper settled at $7,510 per tonne May 22, up 9.8 percent from lows of $6,842 April 23.
While the higher prices for the red metal could stimulate new copper scrap supply over the coming weeks, availability will remain constrained as long as overall scrap generation remains weak and China continues to bid for material, market sources in Europe said.
No. 2 scrap with a copper content of 94 to 96 percent continues to trade at a narrow discount to the LME price. In some cases, discounts are as low as 3 percent, a source at a copper refinery told said.
In some cases, 96- to 98-percent No. 1 copper scrap is trading at a premium in the thinly supplied European market, following a trend seen more widely in the United States and China, a source at a large scrap dealer said.
Pricing is also an issue for consumers of No. 2 scrap, such as copper smelters. But availability is a bigger problem for copper fabricators looking to buy No. 1 scrap, the smelter source said.
"No. 1 scrap is very difficult to find at any price, and that is starting to affect supply for these plants. Were seeing this in the increased orders were getting for cathode. Fabricators are producing the same amount of wire rod, but they need to use more cathode to do so," he said.
A version of this article was first published in AMM sister publication Metal Bulletin.