How good is the copper discount, scrap copper is hot?

Since the fourth quarter of this year, China’s copper consumption has undergone a weak transformation. Although on the surface it seems to be insignificant, it actually can accurately reflect the market transformation. In particular, since November, the domestic five brands of premium copper including Guiye, Jinchuan, and Copper Crown have all experienced different levels of premiums. Currently, the price of Guiye Copper, which is common in the domestic market in East China, is relatively high in comparison with other brands. Even so, it is difficult to escape the price of premium. As of the end of December, the copper price discount rate has been gradually enlarged, and the best copper premium is more than 300. In this short period of time, the maximum international copper price is close to 8,200 U.S. dollars. China, as an absolute big country in copper consumption, has encountered a period of severe demand for copper. The demand for copper has not been significantly reduced, and according to Fubao's survey data, it has also fully demonstrated that the change in the operating rate of copper manufacturers is also small. However, the demand for electrolytic copper has been greatly reduced, and the good copper that once enjoyed premium treatment has also become a commodity.

A good copper discount is a foregone conclusion, but the scrap copper market looks relatively dazzling. In particular, since the fourth quarter, the domestic scrap copper gap has become larger and larger. Scrap copper imports have increased significantly, and the rising trend is evident. It fully shows that China's dependence on scrap copper is gradually increasing. With the recovery of domestic small traders, the price war between scrap copper traders has become fiercer, and the trade spreads among intermediate traders have been compressed to a very small extent. Therefore, the supply of scrap copper has become a relatively scarce variety. A lot of copper mills can't even buy it, but it's not like tiny mini workshops. Bright line-based scrap copper has become very popular, scrap copper prices appear easy to rise and fall, especially in the middle of this month when the international copper price was significantly lower, scrap copper prices have hit another record high. And the supply of the market is still very scarce. Most of the manufacturers who rely on scrap copper have seen a decline in operating rates.

This contrast between the good copper and scrap copper markets is not groundless. It is not just the policy that advocates recycling economy. In fact, the process of processing many scrap copper into copper products is relatively simple and the profit margin is relatively easy to control. The main reason is that the cost of electrolytic copper is lower. At present, manufacturers with a little bit of scale on the market have a one-stop production process from the recycling of scrap copper to the production of copper products. Plus a lot of scrap copper can be used as a finished product as it can be processed slightly. Many personal workshops in Baoding, Hebei Province, are mainly used to directly reprocess scrap copper into copper rods. Wire and cable companies need only to purchase products in the past and they can be listed. The whole process is very simple. Compared with electrolytic copper, it does not have this advantage, and the high price is also the main reason leading to the transfer of demand points. The purchase of electrolytic copper also has to return to the furnace to make a series of copper products. Most of the same process but the cost is no better than thousands of reasons, so compared to scrap copper becomes relatively sought-after, electrolytic copper is also relatively lack of advantages. The surge in imports of copper scrap has also created a significant demand pressure for the demand for electrolytic copper. Therefore, the ineluctable demand for electrolytic copper directly leads to price discounts, and the shortage of copper scrap will become a sought-after product.