Copper scrap biz to boom in China
Monday, 18 January 2010
BEIJING, Jan 17 (Commodity Online): Right from the beginning of 2010 China has started import of large quantities of refined copper and scrap copper, driving domestic and international copper prices upward. But as China's consumer demand was not as strong as expected, a potential supply surplus caused by the large imports has begun emerging now.
The current copper price is strongly supported by bullish expectations and traders' unwillingness to sell, but it is an economic recovery that will be the main driving force for copper prices in the future.
Consumer demand for copper in Europe and the United States will push copper price to a higher level, which is the main reason that analysts remain bullish on copper prices for 2010.
At present, there are a large number of hidden inventories of both refined copper resources and scrap copper supply in the domestic market. The inventory pressure will restrict the rise of copper prices to some extent, at least in the short-term.
Recently, a sustained decline in copper imports in Guangdong province led to a certain degree of scrap supply shortage in that market. The tension also affected other domestic copper distribution markets. According to some scrap traders, the copper business was not very good in mid-December, and aluminium scrap, stainless steel scrap and other metals were also yielding low margins.
The increasing cost to import copper and other containers along with the extended operating cycle of clearance has significantly affected the importers' enthusiasm. It is reported that in Guangdong province there are 89 metal scraps enterprises that have been under investigation by the local customs supervision and control departments, which directly affects their volume of scrap container imports.
It is expected that there will not be any large-scale purchasing activities for metal scrap until next March. In the short term the domestic imports of metal scrap will maintain a stable-to-low level.
In the East China (Shanghai, Ningbo, Taizhou) market, the copper scrap supply has tended to be tight to some extent, because the local traders have eased back on the number of containers of imported copper scrap for months, and some scrap holders are reluctant to sell.
In fact, the market shortage of copper scrap does not really drive the rising price of copper, but it is mainly due to traders' unwillingness to sell at low pricing since most traders remain optimistic about the market outlook.
The current copper price is strongly supported by bullish expectations and traders' unwillingness to sell, but it is an economic recovery that will be the main driving force for copper prices in the future.
Consumer demand for copper in Europe and the United States will push copper price to a higher level, which is the main reason that analysts remain bullish on copper prices for 2010.
At present, there are a large number of hidden inventories of both refined copper resources and scrap copper supply in the domestic market. The inventory pressure will restrict the rise of copper prices to some extent, at least in the short-term.
Recently, a sustained decline in copper imports in Guangdong province led to a certain degree of scrap supply shortage in that market. The tension also affected other domestic copper distribution markets. According to some scrap traders, the copper business was not very good in mid-December, and aluminium scrap, stainless steel scrap and other metals were also yielding low margins.
The increasing cost to import copper and other containers along with the extended operating cycle of clearance has significantly affected the importers' enthusiasm. It is reported that in Guangdong province there are 89 metal scraps enterprises that have been under investigation by the local customs supervision and control departments, which directly affects their volume of scrap container imports.
It is expected that there will not be any large-scale purchasing activities for metal scrap until next March. In the short term the domestic imports of metal scrap will maintain a stable-to-low level.
In the East China (Shanghai, Ningbo, Taizhou) market, the copper scrap supply has tended to be tight to some extent, because the local traders have eased back on the number of containers of imported copper scrap for months, and some scrap holders are reluctant to sell.
In fact, the market shortage of copper scrap does not really drive the rising price of copper, but it is mainly due to traders' unwillingness to sell at low pricing since most traders remain optimistic about the market outlook.