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PrintJapanese smelter sources Wednesday denied that there was any risk of the current tightness in scrap supply affecting copper production.
Copper smelters use scrap copper as cold charge when melting copper concentrate. Scrap controls sudden temperature changes in the concentrate. According to Pan Pacific Copper, roughly 70 kg of scrap is required for production of 1 mt of copper cathode, accounting for roughly 7% of feedstock.
A spokesman for Sumitomo Metal Mining said that the company's production had not been impacted by the current scrap shortage as it uses scrap with 90-95% purity and there is no shortage of this grade of scrap.
Japan Copper & Brass Association data shows that the country consumes more than 500,000 mt of scrap of 99.9% or above purity annually to produce copper coil, sheet and other rolled products.
This year, supply of this higher grade scrap in Japan has fallen to half of last year's as industrial activity slowed down. Surging scrap demand in China drove more supplies there as well.
Copper smelters' scrap consumption is small, and so has limited impact on the entire scrap market, the Sumitomo spokesman said.
Japan's five copper smelters require roughly 10,000 mt/year of scrap in total. Scrap comprises copper fragments in various forms that failed to meet quality standards. Sumitomo uses scrap that is produced during cathode refining process and it also imports scrap.
Japan imports about 3,000-5,000 mt of scrap, containing roughly 90-95% copper, annually, a Tokyo scrap trader said.
Availability of 90-95% scrap has increased recently as China cut its scrap imports on falling domestic prices for scrap which is pegged to the Shanghai Futures Exchange prices. Less demand from China has in turn led to a fall in international prices.
In March and April, when SHFE prices were $500/mt higher than the London Metal Exchange prices, scrap imports into China were priced at $500/mt plus LME cash. Currently, the metal is trading at $10-50/mt minus LME cash, another scrap trader said. –Platts
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