Copper Prices Retreat as Discount Rates Stay High

Copper prices retreated from their rapid rise last week, but tight supply and high premiums kept discount rates elevated. The London Metal Exchange (LME) copper price opened at $13,524/mt on Monday and rose to near $13,934/mt before pulling back.

The payable indicator for ex-China copper scrap experienced a slight correction due to the mid-week surge in copper prices but rebounded to similar levels by Friday as prices pulled back. Mainstream quotations for ex-China bare bright copper remained around 99%, with No. 1 copper quoted in the 97%-98% range and No. 2 copper floating within a 96%-98.5% quotation range.

The mid-week surge in copper prices boosted suppliers' willingness to sell, but downstream procurement sentiment remained weak due to just-in-time procurement. The tight supply situation of ex-China copper scrap persisted, with limited available cargo, keeping suppliers' sentiment firm. Spot premiums for copper cathode rose, supporting the discount rate for copper scrap.

The market continues to show a weak supply-demand dynamic, with tight supply on the supply side and cautious procurement on the demand side. With downstream orders yet to improve and copper prices staying high, just-in-time procurement is expected to dominate demand next week. The discount rate for ex-China copper scrap is expected to stay high due to tight supply and elevated spot premiums.