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Market participants said that they are bracing for a tighter supply environment resulting from any US-China trade frictions that could follow the inauguration of Donald Trump as the next US president, and from limited supply growth amid copper smelter expansions, and persistent tightness in the copper concentrate market outlook.
That said, some supply pressure is likely to be alleviated by the East Asian country’s loosening of import controls, increased offshoring, and continued improvements in scrap collection.
China imported 2.03 million tonnes of copper scrap from January to November 2024, up by 13.7% from 1.79 million tonnes in the corresponding period a year earlier, according to Chinese customs data.
China’s copper scrap import interest has been strong amid persistent tightness in copper concentrate supply, as well as growing interest in producing low-carbon emissions material in China.
Stepping into 2025, however, Chinese market participants are increasingly wary of a potential resurgence of US-China trade tensions [LINK], mirroring the tariff war that escalated during Trump’s first term in office.
“The looming policy risk is keeping some buyers away from importing US-origin copper scrap, because no one knows what will happen with Trump, and we prefer to wait for a clear signal,” one domestic copper scrap trader said.
These concerns have dwarfed the results of China’s recent loosening of restrictions for recycled copper and aluminium that came into effect on November 15, 2024.
The effect could be also seen in the decline in the country’s copper scrap imports for November, which fell by 5.25% month on month to 173,534 tonnes, according to customs data.
While the exact tariff remain uncertain, considering that Trump has warned of tariffs on Chinese goods as high as 60%, market sources spoken to by Fastmarkets fear that a trade war could exacerbate scrap shortage concerns.
The US, after all, is still China’s biggest supplier of high-purity copper scrap.
Also likely to put a strain on supply is the opening of several new smelters in 2025, across the US and China.
To mitigate some supply chain disruptions, a growing number of Chinese companies have been offshoring the pre-processing of lower-grade scrap to places such as Malaysia and Thailand over the past year.
But intensified competition is increasing the raw material cost, some market participants said.
“In recent years, more and more people have become interested in using more copper scrap in Asian countries – not only China, but Japan and South Korea, among others. This has intensified market competition, [and] its costs are rising accordingly,” a second trader in Singapore said.
The same source also pointed out that, more importantly, more countries are realizing the importance of copper scrap, and encouraging the reuse of materials domestically, rather than exporting them, which also reduces the volume available for sale.
On the domestic front, the secondary copper industry has been growing both in size and importance in recent years, and the outlook is promising because of the Chinese government’s efforts to encourage the industry’s development, but it will take years to materialize, industry sources said.
“Recycled copper output has been rising in recent years but, compared with developed countries, the recycle ratio remains low, and the market is still not well regulated. There is still a long way to go,” a third copper trader in Ningbo said.
China’s recycled copper output is expected to reach 4.3 million tonnes in 2024, up from 4.1 million tonnes in 2023, according to a speech by the president of China’s Nonferrous Metals Industry Association, Ge Honglin, on November 10, 2024.
A fourth trader in Shanghai said: “[In 2024], we saw domestic copper smelters show more interest in using more scrap for copper production, due to hefty copper concentrate costs. I think this will continue in 2025 if scrap supplies grow.”
Domestic copper smelters increased their use of copper scrap and blister in the middle of 2024 due to better availability of both materials and supply tightness in copper concentrates.
The Chinese government has also been boosting efforts to improve local scrap collection rates.
This includes a significant investment of 300 billion yuan ($40.8 billion) to support large-scale equipment upgrades and consumer goods replacement, put in place last July, as well as establishing China’s first state-owned recycling enterprise, China Resources Recycling Group, in October.
Most recently, on January 1 this year, China extended its provisional tariff on imports of recycled copper and aluminium for another year. Recycled copper and aluminium, shipped under harmonised codes (HS) 74040000 and 7602000 respectively, have a provisional tax rate of 0%, down from the most favored nation (MFN) rate of 1.5%.
Fastmarkets’ monthly assessment of the No1 copper material, RCu-2A,1B (candy/berry), cif China, LME/Comex discount, averaged 12.25-18.75 cents per lb in 2024, widening from an average of 9.08-12.00 cents per lb in 2023.
The corresponding monthly assessment of the No2 copper material, RCu-2B (birch/cliff), cif China, LME/Comex discount, averaged 21.08-31.25 cents per lb in 2024, widening from 20.25-24.67 cents per lb in 2023.
The full year of 2024 was another slow period for copper blister spot trading, with most supply once more locked away in long-term contracts.
Fastmarkets’ price assessment for copper blister 98-99% RC, spot, cif China, averaged $111.67-127.08 per tonne in 2024, up by 4.76% from an average of $105.42-122.50 per tonne in 2023.
The higher refining charges (RCs) were due to a spike in domestic supply in late April and May, which sent demand for imported material tumbling. RCs were otherwise hovering in the range of $100-120 per tonne in the second half of the year.
Blister copper, a product of primary copper smelting, usually has a lower RC at times of tight supply, which is similar to the copper concentrate market. The material can be used to replace copper scrap.
On an annual basis, market participants said that Jiangxi Copper and CNMC reached a deal on December 31, 2024, at $95 per tonne for supplies in 2025, a decrease from $116 per tonne in 2024.
Market participants have not yet heard any updates on First Quantum’s long-term contracts for 2025, but expect that it will be slightly below the benchmark.
Several Chinese sources also estimated that traders would probably have to procure material around $80 per tonne, based on the long-term contract.
With tight copper concentrate supply, and a lack of new blister supply on the horizon, blister RCs are likely to be suppressed in 2025, market participants said.
“Blister RCs both on a contractual and spot basis will be falling in 2025, with brisk demand from smelters, acute tightness of copper concentrates and a delayed blister project in Africa all pointing to a decline,” a fifth blister copper trader said.
“Blister spot RCs may rebound in the second half of 2025,” a sixth copper trader in Shanghai said, “with new supplies coming into the market and possible production disruption at smelters, but the market remains tight for the whole year of 2025.”
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