The weekly spreads for US domestic copper scrap tightened slightly on Tuesday amid strengthening demand and a fall in Comex copper prices.
Comex copper spot prices which had touched a high of $4.80/lb on May 11 declined for the second successive week to settle at $4.52/lb on Tuesday, down by 22¢/lb from May 18.
The Davis Index spread for US bare bright copper scrap (barley) tightened by 2.4¢/lb to 16¢/lb under the May Comex contract on Tuesday, with its transaction price dropping by 19¢/lb to $4.36/lb delivered US consumer. The #1 copper wire & tube spread tightened by 1.3¢/lb to 26.7¢/lb under the May Comex contract, with its weekly transaction price falling by 20¢/lb to $4.25/lb delivered.
For #2 light copper, the spread narrowed by 0.4¢/lb to 56.4¢/lb under the May Comex contract while the grade’s transaction price declined by 17¢/lb to $3.96/lb delivered US consumer.
Demand is strengthening in the domestic copper scrap market amid falling Comex copper prices and adequate supply. Buyers would prefer wider spreads, but suppliers are firm on their offers leading to fewer-than-expected deals. Scrap flows also remain affected by high freight costs and labor shortages. The recent thunderstorms across North Texas this week have further impacted flows in that region.
In the primary copper market, the premium for copper cathode has increased by half a penny over the past two weeks as supply tightness continues due to the limited availability of the material from Chile. China’s warning on Monday on taking strict action to curb soaring metal prices has also weighed on the primary copper market. Copper cathode premiums, which had been steady at around 6.5¢/lb delivered Midwest consumer since the beginning of the year, climbed to 7¢/lb delivered today.