US export copper scrap spreads tightened on all grades over the past week on China’s indication that it planned to re-enter the scrap market. The Asian country’s announcement of scrap imports free of quotas has come with new, more stringent specifications on scrap quality, which has started to impact the supply and demand curves but not as much as it did in the past.
Transactional prices rose as the Comex market works back to its peak for the year of $3.20/lb. The next active Comex contract closed on Wednesday at $3.15/lb, up from $3.10/lb, on Nov 4. The Davis Index is closed for the US Veterans Day holiday on Nov 11.
The weekly Davis Index for #1 copper wire and tube surged by 7.4¢/lb to $2.884/lb fas US port, while the index for #2 copper stepped up by 4.9¢/lb to $2.729/lb fas on Tuesday. The bare bright (barley) index increased by 6.4¢/lb to $2.984/lb fas US port.
The Davis Index spread for #1 copper wire, and tube (berry/candy) was tighter at 27¢/lb fas under the next active Comex contract, better by 2¢/lb. The spread for #2 copper (birch/cliff) narrowed by 2.5¢/lb to 42.5¢/lb fas, under the next active month on Comex. The spread for bare bright (barley) was stronger by 2¢/lb at 17¢/lb fas under the next active Comex contract.
Some suppliers are not comfortable with China’s new specs and have instead, found other homes in Southeast Asia that are stocking inventory for resale into China once the new customs process becomes standard practice and is more widely understood.