In April, China officially announced that it would introduce a category seven ban on imports of copper scrap by 2019. Rumours of such a move began in 2016, causing concern for scrap importers and copper consumers.
The move immediately affected the price of copper, which had been steadily increasing since 2016 following a six-year slump. As imports of category seven copper dropped off almost completely within a few months, the price of copper has further increased as companies turn to category six imports, ores and concentrates. At the beginning of this year it hit $7,000/t and has continued to be strong at $7,246 at the time of writing.
“I think the copper price tells you that the market saw it as potentially restricting and potentially disruptive from a copper cathode perspective,” says partner and mining analyst at SP Angel John Meyer. “And I think at the same time, this comes in with certain US tariff changes which again are disruptive. I won't say it's positive because actually from a consumer standpoint, higher copper prices are negative for them. But any disruption serves to raise metals prices.”
The category seven ban will stop the import of products that are only 5% or less copper, including oiled copper cable and waste motors. China is the biggest importer of scrap copper in the world, accounting for 45%. As such, the ban could remove as much as 300,000t of copper equivalent from the market.
While it won’t actually come into effect until 2019, the ban’s effect has been instantaneous. Since April, imports of copper cable and waste have decreased by 87%. What does this level of disruption mean for the copper market?