Tight Cu Scrap Supply to Change Dealers Stance

Japanese quarterly copper scrap price negotiation is deadlocked for July-September for long term transaction between the scrap providers and the users including rolled copper makers. The providers seek higher price under tight supply while the buyers try to keep the price level. The dealers would reduce the long term based supply volume and shift to profitable spot based deal.

A copper foil maker notified the scrap suppliers of same level of scrap price for July-September as April-June earlier the month. A scrap dealer said the buyers fail to understand the market condition when the scrap generation decreased by 40-50% depending on grades due to the major earthquake and lower market price. The suppliers notified the buyers of lower volume.

A rolled copper maker said the supply couldn’t improve even if the makers pay several thousands per tonne of premium. The buyers couldn’t secure the requirement if they pay more when the supply is as low as after Lehman shock. A dealer said the buyers don’t understand the scrap suppliers pay higher price than the selling price to meet the supply commitment.

A copper flat products maker got arrival of spot scrap import cargo recently after the maker ordered in April with expectation for tight supply. The maker increases purchase of electrolytic copper. A brass bar maker also doubles electrolytic copper purchase volume while the maker ordered large lot electrolytic zinc import.

Many buyers have no concern on scrap shortage. A rolled copper maker said rolled copper makers can make the products from high priced electrolytic copper and zinc even with lower scrap composition while electrolytic copper foil makers have to secure nugget. The buyers are reluctant to pay more for scrap even under the tight supply.

A dealer said scrap dealers cannot make money based on the long term based transaction when the dealers have to meet the supply commitment even under tight supply while dealers without commitment for long term buyers can make money. The dealers would shift to spot based transaction from loss making long term transaction.