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

How good is the copper discount, scrap copper is hot? Since the start of this year's fourth quarter, China's copper consumption has been undergoing a subtle but meaningful shift. On the surface, it may seem minor, but in reality, it reflects deeper market dynamics. Especially from November onward, the premium for top domestic copper brands like Guiye, Jinchuan, and Copper Crown has started to fluctuate significantly. Among these, Guiye Copper remains one of the most sought-after in the East China region, yet even with its strong brand reputation, it still faces pressure from rising premiums. By the end of December, the discount rate on copper had widened considerably, with the best copper premiums exceeding 300 RMB per ton. Meanwhile, international copper prices have climbed close to $8,200 per ton. As the world’s largest consumer of copper, China is experiencing a period of high demand. However, despite stable overall consumption, data from Fubao shows that the operating rates of copper manufacturers haven’t changed much. What has changed is the demand for electrolytic copper, which has dropped sharply. Once a premium product, high-quality copper is now being treated more like a regular commodity. The trend of copper discounts seems inevitable, but the scrap copper market has been showing a different picture. Since the fourth quarter, the gap between supply and demand for scrap copper has widened significantly. Imports of scrap copper have surged, and the upward trend is hard to ignore. This indicates an increasing reliance on recycled materials in China’s copper industry. With the recovery of small traders, competition among scrap copper dealers has intensified, compressing trade spreads to minimal levels. As a result, the supply of scrap copper has become tight, making it a scarce resource. Many copper mills struggle to secure enough scrap copper, while smaller workshops find it easier to access. Bright-line scrap copper, in particular, has gained popularity, and its price has shown high volatility. This month, when international copper prices fell sharply, scrap copper prices hit a new record high, despite limited supply. Most manufacturers relying on scrap copper have seen their production rates drop as a result. This contrast between the two markets isn’t arbitrary. It’s not just about government policies promoting a circular economy. The process of converting scrap copper into finished products is relatively simple and offers better control over profit margins. One key reason is the lower cost of electrolytic copper compared to other sources. Many large-scale manufacturers now offer a full-cycle process, from recycling scrap copper to producing final copper products. Additionally, much of the scrap can be processed slightly and used directly, making it highly efficient. In cities like Baoding, Hebei, many small workshops specialize in reprocessing scrap copper into copper rods. Cable companies used to buy finished products, but now they can source directly from these workshops. The process is straightforward and cost-effective. In contrast, electrolytic copper requires smelting and further processing, which adds complexity and cost. These factors make scrap copper more attractive, pushing demand away from traditional copper sources. The surge in scrap copper imports has also increased pressure on the demand for electrolytic copper. As a result, electrolytic copper prices have fallen, while the scarcity of scrap copper has made it a highly valued commodity. This shift highlights a broader transformation in China’s copper industry, where sustainability and efficiency are driving new market trends.

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