Scrap copper in China is selling for 30 cents a pound less than New York futures, about twice the discount three months ago, because of weakening demand there, according to Robert Stein, president of the non-ferrous division of the Bureau of International Recycling.
Demand in China, the world’s largest copper buyer, has slowed because of monetary tightening and high prices, Stein said in an interview in Brussels today. Copper futures in New York have climbed about 20 percent in the past three months, partly because the dollar declined in value against other currencies, spurring investor demand.
Higher prices and higher interest rates mean “it takes more money to play,” Stein said. Stein is also the vice president of St. Louis-based recycler Alter Trading Corp.
Copper for delivery in December was at $3.874 a pound by 10:17 a.m. on the Comex in New York. The discount in China three months ago was about 15 cents, Stein said.
Less demand from China meant some U.S. scrap copper was redirected to Europe, Stein said. Demand from the automotive industry globally has been “really good,” he said.
If the price in Shanghai rose in relation to London, demand in China would probably pick up, according to David Klein, a trader at Alter Trading. Copper in London has climbed 15 percent this year, while the Shanghai price is up 7.6 percent.
Speculation that the Chinese government may revalue the yuan has also curbed demand, said David Chiao, vice president at Uni-All Group Ltd., a recycling company based in Atlanta. “When the currency exchange rate has been settled, probably the situation will become more stable and people will start buying,” he said.