Millberry Payability Rebounds as No. 1 and No. 2 Copper Scrap Lag
Millberry payability has returned to its normal levels of 98-99% in China, according to Shanghai Metals Market (SMM) research. This is a significant development for copper scrap market, where tightness is concentrated in clean and high-grade material.
The recent surge in LME copper prices led to an initial decline in Millberry payability, but it has now recovered unevenly across grades. The current premium of the LME cash-to-three-month price at $545/mt further supports high-grade scrap.
SMM visited Chinese recycled-copper companies and found low inventories, with most remaining stocks consisting of No. 1, No. 2, and mixed scrap. Millberry was particularly scarce due to cable replacement, industrial production, and equipment dismantling, which cannot increase immediately in response to higher prices.
High copper prices have also raised processing losses, financing costs, and recovery risks associated with lower-grade scrap. This has encouraged buyers to reduce No. 1 and No. 2 payabilities, resulting in quotes at 95.5-96.5% and 94.5-95.5%, respectively.
A separate supply risk also exists due to invoice and tax-compliance issues preventing some domestic copper scrap from entering formal trading channels. SMM estimates that around 600,000 mt of non-invoiced scrap may have accumulated outside the formal market, which could potentially impact prices if released in a concentrated manner.