Copper:Potential ban on low quality copper scrap imports in late 2018

新萄京官网,    According to Shanghai Metal Markets, the recycling branch of China
NonferrousMetals Industry Association has been informed that type 7
copper scrap(including electric motors, wires, and miscellaneous
machinery waste) will nolonger be allowed, starting from late 2018,
which has led to a c.4% copper pricehike today. The news is a catalyst
but we view the copper price rise as more abouta catch up to other metal
price performances, amidst weaker US dollar sentiment.As shown in Figure
1 below, steel, zinc, aluminium and other minor metals haveincreased
c.50%-200% from the recent trough in 2015 vs. copper’s c.40% rise.

Copper price hiked on China’s potential ban on low quality copper
scrapimports

    Type 7 copper scrap accounts 3% of total China Cu demand, but only
startsfrom late 2018

    Within total China copper scrap imports, Antaike expects that c.60%
belong tolow quality scrap in absolute volume and 20%+ (300kt in 2016)
in terms of Cucontent as type 7 scrap in general has very low Cu content
(c.14%), equivalent toc.3% of total China copper demand (Figure 2).
However, it only starts late 2018,meaning there is a risk of stronger
copper scrap imports until 2018, which couldweigh on refined copper
consumption in the near term. On the other hand, wehave also heard from
Shanghai Metal Markets, that some disassembling playersare moving their
capacity to Southeast Asia. A year and a half ramp-up periodseems
reasonable to us.

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