According to SMM data, China's recycled copper supply is heavily reliant on imports, with the US being the largest source. As of October, 2024, recycled copper imports from the US accounted for 20% of total imports, far exceeding any other single region.
Since Trump signaled that tariffs on certain Chinese goods would be raised after taking office, many recycled copper traders and copper billet producers have been gripped by panic. During Trump's first term as US president, trade frictions between China and the US inflicted significant "damage" on the recycled copper market, with increased landed costs leaving recycled copper traders apprehensive. As a result, both recycled copper traders and copper billet producers ceased purchasing secondary brass alloy raw materials from the US by year-end, leading to a tight supply situation.
However, Q4 is traditionally a peak production season for copper billet producers, and demand for secondary brass alloy raw materials has been robust. Companies are forced to contend with rising raw material prices. Additionally, end-user companies, concerned about potential tariff hikes under Trump's administration, rushed to fulfill export orders, driving up demand for copper billets, particularly in November. By December, this demand began to decline. Considering shipping schedules, continuing to arrange exports in mid-December poses risks of higher taxes upon arrival. According to SMM, copper billet orders in early December dropped by approximately 60% MoM compared to November.
Furthermore, customs inspections on secondary brass alloy raw material imports became stricter in December. For instance, secondary brass alloy raw materials from faucets containing plastic components are prohibited from entering China. As a result, many secondary brass alloy raw materials face the risk of being returned, further exacerbating the already tight supply landscape and driving prices higher. According to SMM, many recycled copper traders' warehouses have been emptied.
Overall, due to reduced demand for export orders, the operating rates of copper billet producers in December are expected to decline MoM compared to November. However, SMM predicts that the tight supply of secondary brass alloy raw materials will not ease, prices will continue to rise, and copper billet prices will also "rise accordingly."
