China’s copper smelters have been facing a shortage of concentrate, a key raw material processed into refined metal used in the power and construction industries. To address this, China’s copper waste and scrap imports have climbed significantly, with overall imports rising 25% to 783,004 tonnes in the first four months of 2024 compared to the same period in 2023. Imports from the United States, China’s top supplier of copper scrap, jumped 37% to 153,059 tonnes during this period.
However, the record-high copper prices, with the CME price reaching a record $11,460 per tonne on May 20, are now causing a pause in U.S. scrap shipments to China. Chinese buyers are deferring U.S. copper scrap purchases and looking to price them against the lower London Metal Exchange (LME) prices instead of the higher CME prices.
The concentrate shortage has been exacerbated by deteriorating production at mines, particularly in Latin America. This has led Chinese smelters to increasingly rely on copper scrap to feed their furnaces and protect their profit margins.
Scrap typically accounts for around 30% of global copper supplies annually, and its tonnages can fluctuate significantly during periods of high or low prices, helping to rebalance the market. Macquarie expects the gap between copper supply and demand to widen to 1.6 million tonnes by 2030, up from a deficit of around 86,000 tonnes this year.
As China faces continued concentrate shortages, the country is now seeking alternative sources of copper, including exploring ways to price U.S. scrap more competitively, in order to secure the vital raw material needed for its power and construction industries.