Scrap Copper Use Will Be ‘Good,’ Alter Trading Says (Correct)

(Corrects story published on June 10 to fix China’s domestic scrap copper supply in seventh paragraph.)

Scrap copper usage this year will probably be “good,” partly because automakers are taking up more metal supplies, according to recycler Alter Trading Corp.

Increased automobile production may limit a seasonal decline in scrap demand in the third quarter, said Robert Stein, vice president of St. Louis-based Alter Trading. General Motors Co. and Ford Motor Co. posted U.S. sales increases in May that topped analysts’ estimates as higher consumer confidence and inexpensive gasoline spurred customers to buy more cars.

Demand for scrap copper is “going to be good for the rest of the year,” Stein said by phone from Barcelona yesterday.

Scrap copper accounts for about a third of supplies used by smelters to produce refined copper, according to the International Copper Study Group. China, the world’s biggest copper user, imported 330,000 metric tons of scrap copper in May, bringing the total up 15 percent for the first five months this year compared with the same period last year, according to customs data today.

“Some people reported that activity in China had slowed down in May but we didn’t see it,” Stein said.

Copper prices have dropped 14 percent this year on the London Metal Exchange as China tried to cool growth and European government efforts to rein in debt heightened concern of economic slowdown. Europe consumes about a fifth of the world’s copper, according to Barclays Capital.

“We, as a supplier, haven’t really noticed any marked change in terms of people’s ability to pay and performance,” Stein said, referring to customers in China. The country’s domestic copper scrap supply may rise to 1.3 million tons this year from 730,000 tons in 2008, Carlos Risopatron of the Lisbon- based copper study group, said on June 8. The figure excludes scrap imports.

Scrap Needed

Limited growth in copper mine production means some smelters aren’t getting enough business to be profitable, making them more dependent on scrap supplies, Bernd Drouven, chief executive officer of Aurubis AG, said at a conference this week in Hamburg. Aurubis is the world’s second-largest producer of refined copper after Codelco in Chile, based on 2009 output, according to London-based research company CRU. Some 30 percent of Aurubis’s copper is produced by using recycled materials, the company said in a presentation at the conference.

Copper demand usually declines in the third quarter because of factory shutdowns due to maintenance and vacations in the Northern Hemisphere. Cars and other forms of transportation are the third-largest use for copper after electronics and construction, according to Aurubis.

Changes to China’s scrap regulation, effective June 1, have had little effect on shipments into China, Stein said. Under the new rules, scrap of different types must be boxed separately and the content accurately reported, according to the General Administration of Customs of the People’s Republic of China.

“For the people that have been packaging their products and behaving properly it doesn’t seem to have had an impact,” Stein said. He is also the president of the non-ferrous division at the Brussels-based Bureau of International Recycling.

To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net.

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