SINGAPORE - The Chinese copper scrap market is expected to remain tight as the pandemic and global economic downturn worsen an already limited supply caused by global trade restrictions, a JCC Renewable Resource executive said on Thursday.
"Due to increased uncertainty of the global economy and the aftermath of COVID, the market for raw material is in tight supply," said Huang Yifu, vice general manager of Chinese scrap company JCC Renewable Resource.
"This year, most (processing and smelting) factories have reduced production due to a shortage of raw materials," Huang said, adding that the number of Chinese scrap traders has also fallen sharply.
After years of an environmental crackdown on solid-waste imports, China - once the global scrap metal processing hub - now only allows high grade material to enter.
China's copper scrap import growth is expected to decline in the fourth quarter due to volatility in exchange rates and price fluctuations, he said.
"Overseas supply continues to be weak and overseas demand has increased. The tight supply pattern of copper scrap is expected to continue," Huang told delegates at the CRU World Copper Conference Asia.
China, the world's biggest copper consumer, is seen consuming more than 3.8 million tonnes of copper scrap this year, up 4% annually, according to Huang's presentation slides.
Domestic recycling volume in China is also expected to surpass 2.5 million tonnes while imports could reach more than 1.3-million tonnes.
Imports from the United States, Japan and Thailand have risen but imports from Malaysia are down, Huang added.
Malaysia recently raised purity thresholds on scrap imports, while Europe - a major source of copper scrap raw material - is also tightening export regulations.
"We will see that high grade material will be shipped around, but low grade will be treated locally more and more," said Michael Hellmann, senior vice president commercial at Aurubis, Europe's biggest copper smelter.