China Copper Scrap Market Faces High Invoice Costs, Price Spread Widens

The copper scrap market in China is experiencing significant pressure due to high invoice costs. The price difference between copper cathode and copper scrap has swung wildly within a range of 4,400-5,200 yuan/mt this week (Aug. 10-13). SMM data shows that the tax-inclusive invoice rate for copper scrap has reached 12%, while supply is scarce due to a lack of domestically produced tax-inclusive copper scrap.

This scarcity has driven enterprises to scramble for input VAT invoices, pushing the invoice tax rate up from 10.5% to 11.5%-12%. As a result, scrap utilization enterprises are lowering copper scrap purchase prices to pass on the pressure upstream.

The price spread between futures contracts widened to 800 yuan/mt as delivery of the front-month futures contract neared, and suppliers' shipment pace showed a 'rush to cash in' pattern. Scrap utilization enterprises shifted pricing to the September contract, but with the forward contract in a clear downtrend, purchase willingness was muted.