Copper Scrap Market Grapples with Supply Shortages and High Prices

In July 2026, the copper scrap market in China struggled with tight supply and high prices. The operating rate of secondary copper rod was just 12.43%, down 0.18 percentage points from June and 18.47 percentage points from a year ago.

The price difference between primary metal and scrap widened to over 4,000 yuan/mt as the SHFE copper contract surged above 106,000 yuan/mt. This made it economically viable for companies to purchase copper scrap, leading to robust demand from secondary copper rod enterprises.

However, this demand was driven mainly by futures arbitrage rather than physical restocking. Companies bought copper scrap in the morning and then stopped quoting as prices rose, without chasing higher prices to accept goods.

The cancellation of subsidies in Henan province and other regions triggered a regional supply restructuring, concentrating compliant cargoes in areas with a relatively stable policy environment.

Looking ahead to August, market analysts expect that if the price difference between primary metal and scrap stabilizes above 4,000 yuan/mt, this may drive restocking demand. Otherwise, the secondary copper rod market will continue with a weak equilibrium pattern of suppliers selling when prices rise and rod enterprises hedging and buying.