SHANGHAI A tightness in Chinas copper scrap supply is gradually alleviating in the fourth quarter, supported by a steady rise in imports as customs checks ease.
Copper scrap imports rose to 394,585 tonnes in September, the highest monthly level thus far this year and the third straight month of increases, according to preliminary customs data. The volume was also 3.3 percent higher than August, but was still down 14 percent year on year.
"Copper scrap imports are increasing from August, releasing some supply pressure," one copper scrap trader told AMM sister publication Metal Bulletin. "Due to low recovery rates from domestic copper scrap, supply is largely dependent on imports. Around 70 percent of copper scrap is coming from imports, and this percentage is higher than in 2012."
Some market participants attributed the higher import volumes to the relaxation of Operation Green Fence imposed by Chinas customs in February. This set much tighter thresholds for importing cargoes and stepped up oversight of customs regulations.
A large amount of copper scrap that had become stuck in the port awaiting clearance surged into the market in September, lifting the import data, sources said.
However, the differential between scrap import and domestic copper prices has dampened imports. Volumes are likely to remain at a relatively low level until that changes significantly.
"As the copper scrap price is much higher than copper cathode, with an average deficit of around 1,500 yuan ($245) through September, demand as well as imports of copper scrap will not rise significantly," one copper scrap analyst said.
Import volumes through the first nine months of the year fell 10.1 percent to 3.19 million tonnes.
A version of this article was first published in AMM sister publication Metal Bulletin.