Copper scrap prices stay high in August

That mismatch matters economically because copper scrap is a key feedstock for China’s secondary copper rod and anode-plate producers, industries that sit between upstream metal markets and end-demand from wire and cable makers. When the invoicing burden rises faster than the metal spread, the apparent arbitrage can widen without generating more physical trade. That is exactly what happened in August: the margin was inflated by tax costs being pushed up the chain, not by stronger consumption.

The result is a distorted market in which suppliers held firm on price while buyers stayed cautious. Secondary copper rod producers reported more active raw-material replenishment as orders from wire and cable customers improved, but the broader scrap market still struggled to convert that into volume. Many end users remained in just-in-time buying mode, unwilling to stockpile ahead of the September-October peak season while finished-product demand remained soft and copper prices were still too high for comfort.

The supply side remains the binding constraint. China’s reverse invoicing policy and the shortage of tax-inclusive invoices have tightened compliant supply, especially in Guangdong and other major processing hubs, pushing tax-inclusive rates higher across regions. SMM data showed those rates climbing from 10.5% to 11.5%-12%, leaving scrap suppliers with little incentive to sell aggressively unless cathode prices rose further. That helped keep tax-exclusive scrap prices lagging copper cathode gains and preserved a “sell rallies, hold on dips” pattern among suppliers.

Imports offered only partial relief. China imported 219,100 metric tons of copper scrap in July, up 3.89% from June, as tight domestic cathode supply increased reliance on secondary material. But August is expected to see a modest month-on-month pullback as high prices and seasonal weakness curb orders. Ex-China scrap payables remain elevated, reflecting tight inventories and strong pricing sentiment, but that has not translated into a meaningful pickup in end-use demand.

For investors, the main implication is that copper’s record pricing is no longer just a story about mine supply and tariff fears. It is also feeding through to the profitability of secondary copper processors, where higher invoice costs are squeezing margins and limiting throughput. That helps explain why smelters making anode plates from scrap kept operating rates low and why blister copper treatment and refining charges stayed near yearly lows.

The bull case is that a sustained cathode shortage, persistent invoice constraints and seasonal restocking could keep scrap values supported into the fourth quarter. The bear case is that if copper retreats from recent highs and invoice costs remain stuck at 12%, the spread will lose its economic meaning and physical demand will stay subdued.

For now, the market looks set to remain in stalemate: prices elevated, activity thin and the hoped-for substitution from cathode to scrap constrained by taxes rather than metallurgy.