SMM

Recently, news has emerged that the newly elected US President Trump will impose a 10% tariff on Chinese products entering the US. According to SMM, domestic import traders have already responded by gradually halting direct imports of secondary copper raw materials from the US due to concerns that the trade dispute between China and the US might affect these imports.

As early as 2018, when the China-US trade dispute intensified, China imposed a tariff of up to 25% on US-imported copper scrap. However, due to the shortage of secondary copper raw materials and the subsequent easing of the trade dispute, these goods were re-included in the exemption list, alleviating the impact on import traders.

However, according to an SMM survey, most domestic import traders have now stopped directly purchasing US secondary copper raw materials, especially those top traders who originally relied on US imports. The US, being China's largest source of secondary copper raw materials, will undoubtedly have a significant impact on the market with the reduction in imports. According to customs data, from January to October 2024, China imported a total of 361,100 mt of secondary copper raw materials from the US, accounting for 19.5% of the total. Therefore, after stopping the purchase of US secondary copper raw materials, it is expected that China's import volume of secondary copper raw materials will see a significant decline.

To cope with this situation, many traders have indicated that they might ship scrap to Southeast Asia for rough processing before re-exporting it to China. Although this method can reduce tariff costs, the time and transportation costs associated with reprocessing cannot be ignored. Additionally, due to the tight supply of secondary copper raw materials in the spot market, the quotations for secondary copper raw materials have remained firm. Recently, the spot price of imported bare bright copper in the Ningbo market was spot copper price minus 400 yuan/mt, leading downstream enterprises to rush to purchase. There have even been instances where traders arbitrarily quoted high prices, and downstream enterprises were still willing to buy. In the past two weeks, the transaction price spread for the same type of goods has reached 1,000 yuan/mt.

In summary, current import traders generally fear that the exemption cancellation will significantly increase import costs, leading them to stop direct procurement of US secondary copper raw materials. This move will significantly impact the import volume of secondary copper raw materials and, amid the shortage of secondary copper raw materials, further stimulate the consumption of copper cathode. SMM will continue to monitor the latest developments.