US export copper scrap spreads tightened across all grades while pricing ticked down due to a drop in the Comex market. Hope has returned to the market after China released its latest round of scrap quotas indicating an increased interest from the Asian nation.
The US market, however, has been slow to react to the new scrap quotas due to the ample supply of copper scrap in the country. Most conversations this week have centered around the increase in freight costs versus the potential demand from China with slightly tighter spreads to offset the drop in the Comex market.
The next active Comex contract closed on Wednesday at $2.99/lb, down 7¢/lb from $3.06/lb on September 16.
The weekly Davis Index for #1 copper wire and tube and bare bright (barley) was lower by 7¢/lb at $2.71/lb fas US port and $2.82/lb fas, respectively. The index for #2 copper also stepped down by 2.7¢/lb to $2.613/lb fas on Wednesday.
The Davis Index spread for #1 copper wire, and tube (berry/candy) narrowed by 0.4¢/lb to 27.3¢/lb fas US ports under the next active Comex contract. The spread for #2 copper (birch/cliff) was better by 3.8¢/lb at 37.7/lb fas US port, under the next active month on Comex. The spread for bare bright (barley) tightened by 0.2¢/lb to 16.8¢/lb fas under the next active Comex contract.
With the 136,335mt of copper scrap quota released by China at the end of last week, the market is searching for answers on how much volume the Asian country will need. The supply chain recently shifted to the southeast Asian countries after China exited the market by choice and suppliers refused to ship to the country due to uncertain regulations. As a result, the market is now unsure about how much new demand will be created by the latest round of quotas.