Recalling that in the first half of 2020, the import policy and the capacity expansion of scrap enterprises, among other factors, brought about changes in the market and promoted further differentiation in the supply of imported/domestic scrap copper, and then, in the process of opening the import policy and the economy after the epidemic, the copper scrap market may produce a new pattern.

From the perspective of the traditional supply structure, it is composed of the old copper produced by the end-of-life industrial recovery and the new copper scrap produced during copper processing, in which the electric power, construction and household appliance industries are the main sources of the old copper scrap, 30% , 22% , 25% . The industry's more general hard goods, "bright copper" is also a kind of old copper scrap. The scrap copper was classified in detail according to the recycled copper/brass raw materials issued by the Standards Committee in 1999.

Copper scrap is an important part of copper raw material. According to ICSG statistics, the proportion of copper scrap is about 35% . In the production of refined copper, about 15-17% of copper scrap is used as raw material. At the smelting end, copper scrap is directly smelted with copper scrap as raw material, which is converted into electrolytic copper supply. At present, with the import policy, environmental protection and other factors, the proportion of scrap copper processing end is gradually increasing. It is currently estimated that about 58% of the copper scrap will flow to the copper processing end in 2020.

According to the statistics of domestic copper scrap flow direction, the proportion of copper scrap raw material flow into the processing end is increasing year by year, of which 2020 estimated data shows that the copper scrap flow direction may reach about 58% , and the copper smelting end flow direction 42% .

At the copper processing end, the low oxygen copper rod is the main flow direction of copper scrap, accounting for about 70% , the brass rod is about 23% , and the other copper rod is about 7% .

According to Fubao nonferrous's estimated data, about 5.7 million tons of copper scrap were consumed from February to September in 2020, of which 3.3 million tons (58%) were consumed at the processing end and 2.4 million tons (42%) at the smelting end. Corresponding Copper Rod end consumption of about 2.32 million tons (70%) , brass consumption of about 760,000 tons (23%) . However, there are some changes in the supply side of scrap copper and the supply structure in previous years: In 2020,13 batches of scrap copper imports were audited, with a total amount of 885,400 tons. Seven batches of scrap copper were imported in 2019, totaling 553,000 tons, an increase of about 60 percent from last year's quota. Only from the perspective of the Import Audit quota of scrap copper imports is still good, but the actual import from the customs goods to calculate, is not ideal.

From January to September 2020,666,000 tons of copper scrap were imported, compared with 1.24 million tons imported in the same period last year. Cumulative year-on-year decrease of 46.27% . Imports of copper scrap amounted to 1.76 million tonnes in the first nine months of 2018. Import quotas for copper scrap have been sharply reduced since 2019 following a ban on imports of the six types of copper scrap. But the taste of copper scrap has improved, according to past data, 2017,2018,2019 imports of copper scrap average grade of 37% , 52% , 80% . The import of scrap copper in 2020 was largely similar in taste to that of 2019, indicating a significant reduction in the import of scrap copper metal tons.

Under the original import pattern, the import of copper scrap mainly flows into four ports: copper rod production, brass material production, refined copper smelting and hazardous waste smelting. The average grade and the ratio of imports are shown in the diagram. However, at present, under the change of import policy, the import pattern of copper scrap may change. First for hazardous waste smelting, the average import of copper products 14-80% . In the import of garbage ban expected to import copper raw material grade is generally 94% or above the first out of the import plate, further into domestic copper scrap supply. And then may change in the pattern is, brass raw materials and refined copper smelting imports. In the original pattern, the use of imported scrap copper for brass materials accounted for about 80 and was very dependent on imports. However, when 547,000 tons were actually delivered by the customs from February to September this year, according to our calculation, 760,000 tons of copper scrap (600,000 tons if the original import of 80 tons is maintained, the demand far exceeds the actual import volume) can not meet the production of brass, increasing end-to-end conversion of raw brass to crude copper in 2020. Similarly, there are refined copper smelting end, copper scrap material locking and production factors such as environmental protection, further turn to crude copper to make up for the shortage of raw materials end.

Hot Discussion is worth noting that the RCEP agreement on copper import tariffs mostly reduced to zero tariffs. Looking into the impact on the follow-up imports of scrap copper, at present, China's imports of scrap copper on the most-favored-nation general implementation of 1.5% import tariff, but in the case of temporary tariff first trial provisional tariff: 0% . At present, all WTO members are most favored countries for China. The direct impact of Rcep on the import of copper scrap is limited at present, but RECP also promotes customs clearance and services in addition to tariffs.

However, in 2018-2020, due to the import policy of scrap copper related factors, the main source of imports of scrap copper has changed. Among the current RCEP member countries: Malaysia, Japan, Thailand, Australia, South Korea are the main source of copper scrap. According to Fubao statistics, RCEP member countries account for about 45% of the total copper imports. With the implementation of RCEP and the new policy of import of copper scrap, the import of copper scrap into China or will bring a new pattern. 2.2021 new pattern of domestic scrap copper raw materials at present, the copper rod end which uses the most scrap copper in the scrap copper processing end is less used in the imported scrap copper, and this regulation of recycled copper (red copper) import raw material standard or will bring to the copper rod raw material supplement. Prior to the strict proportion of metal raw materials to limit the import of scrap copper can not meet the demand for copper rods. At present, the taste of imported recycled copper is more than 94% , and the high metal recovery rate corresponds to the raw material of copper Rod. Under the current situation that imported scrap copper is commonly present in brass and smelting end, the introduction of high-quality regenerated red copper into the processing end after the opening of the new pattern will make up for the tight situation of copper rod raw material, and further integrate the raw material end of the regenerated red copper industry, let the supply pattern of scrap copper enter into a new pattern. And in terms of price,. As the 2021 economy recovers from the outbreak, the probability of a stronger copper market increases, driving the copper scrap price to further pick up. Bright copper price ceiling moved to 53,000 Yuan/ton, the overall copper scrap price to maintain above the 50,000 center of gravity may increase. 

Source: Fubao Youse

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