Analysts predict a significant decline in China’s imports of scrap copper as some traders halt purchases from the United States, the largest supplier, due to escalating trade tensions anticipated under a Donald Trump presidency.
Key Highlights:
Trade Tensions:
Trump, set to take office in January, has threatened 60% tariffs on Chinese imports and recently announced an additional 10% tariff on imports from China. This has raised concerns about potential retaliatory actions from Beijing.
Suspension of Purchases:
According to a survey by Shanghai Metals Market (SMM), most domestic import traders in China have ceased direct purchases of scrap copper from the U.S. This trend is particularly pronounced among major traders who previously relied heavily on U.S. imports.
Current Import Data:
In the first ten months of the year, China imported 361,099 metric tons of scrap copper from the U.S., which constituted nearly 20% of its total scrap copper imports, as reported by Chinese customs data.
Impact on Copper Supply:
A reduction in U.S. scrap copper imports is expected to constrain China’s overall scrap copper supply, leading to increased consumption of refined copper. This comes at a time when the availability of scrap copper is already limited.
Future Outlook:
Zhao Yongcheng, principal analyst at Benchmark Mineral Intelligence (BMI), noted that the effects of these trade dynamics would likely become evident in import data starting next year. He cautioned that finding alternative sources to replace U.S. supplies will take time, potentially exacerbating copper price volatility in the short term.
However, he also stated that higher scrap prices could stimulate an increase in domestic supply.
Recycling Initiatives:
In late October, Beijing announced plans to allow increased imports of recycled copper, effective from November 15, as part of efforts to bolster its recycling industry and reduce reliance on primary raw materials.