Chinese copper industry to be plagued by acute scrap shortage

BEIJING (Scrap Monster) : The Chinese refined copper output is likely to remain subdued owing to acute unforeseen shortage of copper scrap.

Almost 30% of the refined copper producing units in China utilizes scrap copper.The shortage of copper scrap has forced many smelters across the country to either cut down the production or make use of refined metal instead of scrap. The yearly output of refined copper is expected to decline by around 100,000 tonnes in 2013, thereby resulting in supply deficit.

The International Copper Study Group (ICSG) had earlier predicted that 2013 would see a surplus in global copper market. However, the production cuts implemented by major mills in the country raise concerns about whether the target may be achievable. The shortage in copper scrap is likely to remain throughout the year.

The supply of copper scrap from developed countries has witnessed a drastic decline, the main source of copper scrap being old buildings. The steep fall in copper prices has dried up the supply of copper scrap as dealers are unwilling to sell at loss. Those who hold the metal scrap continue to do so in anticipation of higher prices.

The supply shortage of scrap copper has lead to many smelters switching to refined metal. Not only the smelters in China but also the ones in Europe are also reported to be increasingly shifting to refined copper due to non-availability of scrap metal.

The leading refined copper producer in China- Jiangxi Copper Company Ltd last week had shut a 100,000 tonnes/year smelter due to shortage of scrap copper.