US export copper scrap spreads widened over the past week as supply chain disruptions upset the demand-supply balance and the Comex market hovered close to its peak for 2020.
The next active Comex contract closed on Wednesday at $2.91/lb, down 1¢/lb from $2.92/lb on July 22. The Comex market has moved in its current range of $2.90 since July 10, completing a run that started at $2.56/lb on June 16.
The weekly Davis Index for #1 copper wire and tube and #2 copper decreased by 1¢/lb to $2.74/lb fas US port and $2.61/lb fas, respectively, on Wednesday. Bare bright (barley) also declined by the same amount to $2.81/lb fas.
The Davis Index spread for #1 copper wire, and tube (berry/candy) widened by 0.5¢/lb to 18.1¢/lb fas US ports under the next active Comex contract. The spread for #2 copper (birch/cliff) and bare bright also widened by 0.5¢/lb to 31.1¢/lb fas US port and 10.8¢/lb fas, respectively, under the next active Comex contract.
The spreads drifted apart on market fundamentals and could face further supply chain disruptions, especially from China, moving forward. The announcement from several overseas shipping companies to stop servicing ports into China until they have better clarity around the Asian country’s new waste restrictions has sent ripples throughout the supply chain. The move leaves fewer options for US scrap bound for export waters and pressures pricing stateside.
The latest round of import quotas is also causing concern among market participants. The 10th batch of copper quotas was 166,636mt lower at 10,110mt of copper slated for import into China. With the new restrictions, some market participants believe China was not releasing a large quota knowing that shipping companies are refusing to service the ports. Others believe this is a sign of weak demand and trouble ahead for the global market.