Copper Scrap Market Remains in Stalemate as Invoice Costs Erode Price Spread Benefits

The copper scrap market in China has seen an extreme historical price difference between copper cathode and copper scrap, reaching above 5,000 yuan/mt by the end of August 2026. This widening price spread, which reached a record high of 5,533 yuan/mt on August 17, failed to drive up spot copper scrap transactions in August.

The market showed a distorted pattern of 'high price spreads, low transaction volumes, and strong invoice constraints.' The core contradiction has shifted from the 'copper price level' at end-July to the dual pressure of 'invoice costs eroding price spread benefits and physical demand suppressed by high copper prices.'

On the supply side, the underlying constraint in the copper scrap market remains the combined impact of the reverse invoicing policy and the scarcity of tax-inclusive invoices. The invoice tax rate for tax-inclusive copper scrap raw materials across regions has climbed from 10.5% to 11.5%-12%, with Guangdong reaching 12%. Domestic tax-inclusive copper scrap supply is scarce, and enterprises competing for input invoices have kept compliant supply tight.

Looking ahead to September, as the squeeze-driven buying subsides and copper prices retreat from highs, the copper scrap market will likely remain in a high-level stalemate characterized by suppliers holding prices firm and buyers staying on the sidelines. A genuine recovery in physical consumption will require copper prices to pull back to downstream psychological price levels or a substantial decline in invoice costs to rebuild reasonable profit margins for rod producers.