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China helped drive US copper scrap exports higher

Keywords: Tags  Copper Scrap, China,

U.S. shipments of copper and copper alloy scrap to China grew more than 25 percent last year, helping to push up overall exports by 22.6 percent to more than 1.1 million short tons.

The data announced in mid-February was a reversal of the situation at the start of 2010, when China had spent the winter and early spring on the sidelines of the U.S. copper scrap market. The general consensus at the time was that China was concerned about high prices for copper scrap, but there were strong feelings that the Asian economic giant would have to come back into the market at some point. This view ultimately was borne out: China’s 2010 copper scrap intake from U.S. suppliers ultimately increased by 168,202 tons to 836,806 tons, accounting for 73.5 percent of U.S. exports vs. 72 percent in 2009.

Although the Asian nation eked out a 0.1-percent gain in the final month of the year, its purchases of the higher grades of copper scrap from U.S. suppliers slowed in December. The tonnage of bare bright fell 4.8 percent to 928 tons from 975 tons in November, while No. 1 copper scrap deliveries sank 46.9 percent to 1,950 tons from 3,669 tons in the same comparison.

The top five destinations for outbound nonferrous scrap last year, accounting for 90 percent of exports, were China, South Korea, Canada, Taiwan and Mexico. Rounding out the top 10 were India, Japan, Belgium, Germany and Vietnam. Although nonferrous scrap exports started out slowly in 2010, the drought ended in May, when U.S. shipments ended a five-month dip and set a post-2008 high of nearly 297,000 tons. The year-to-date gain of 17.4 percent from the first five months of 2009 actually understated the improvement because pre-2010 export figures for lead scrap were distorted upward by the inclusion of scrapped batteries, which by standard import-export definitions don’t belong with secondary metals. The U.S. Environmental Protection Agency tightened the record-keeping required for lead and battery exports, which forced shippers to reclassify some 6,000 tonnes of "lead scrap" per month (AMM, July 19).

Copper and brass scrap accounted for 33.3 percent of nonferrous scrap exports in May but, thanks to high prices, 52 percent of the value.

Aside from China, smaller export markets also had bigger appetites for U.S. copper and copper alloy scrap last year. Deliveries to Belgium jumped 83.6 percent to 33,965 tons, India’s intake climbed 78.2 percent to 20,761 tons and Germany’s total rose 53.1 percent to 15,170 tons. But purchases by all three nations fell in the final month of the year compared with the previous month—Belgium by 35.7 percent to 5,278 tons, India by 23.9 percent to 979 tons and Germany by 35.7 percent to 1,947 tons. However, Belgium’s purchase of No. 1 copper scrap from U.S. suppliers rose 20.9 percent to 2,277 tons in December from 1,884 tons in November, and the Netherlands upped its intake nearly sixfold to 1,069 tons from 190 tons in the same comparison.

The view in March was that Chinese copper scrap prices would increase during the rest of 2011, despite uncertainty hanging over the market amid fluctuating primary metal prices on terminal markets.

"Most suppliers are still quite firm on their quotes, and the lowering of prices on exchanges—unless sustained for a while or by a big margin—makes little sense to us," said a copper scrap trader in Nanhai, Guangdong province.

Most market sources expect prices to pick up again, driven by concerns about further Chinese government moves to control inflation and the possibility that most commodities could rise further as a result.

Meanwhile, Chinese copper fabricators are far more cautious on the current market and are less enthusiastic about restocking.

"Usually we stock up before long holidays, such as the New Year, but we stayed away from the market confusion since it was truly hard to predict what was going to happen," a source at a copper fabricator in Guangdong province said.

He said that a lack of orders for copper products from downstream users had left him uncertain about booking big orders, whether from his long-established overseas clients or on the spot market, despite a currently tight spot market supply. He said he would sit tight and wait to see how the market pans out.

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