Continual low inventory levels and insatiable demand from China, the world's largest importer of copper, has given the scrap market for the red metal a boost, while eventual reconstruction in the US Gulf Coast may buoy prices further, market sources said.
"Demand at the mills we sell to, domestic and overseas, has been very strong. I don't know if it's a shortage of copper in the US because a lot of it is going overseas to China or not," said one copper scrap merchant in the central United States.
He added that the market for higher grade copper scrap should be very competitive over the next six to eight months due to the tightness.
China's copper scrap imports jumped 32.9 percent in the first seven months of this year from a year earlier, to 2.76 million tonnes.
Matthew Heitmeier, director of non-ferrous metal marketing with Louis Padnos Iron & Metal Co, said the Chinese have re-entered the market following a somewhat slower summer buying period, mostly due to low inventory levels.
"While scrap was rather tight in the summer, there was not a huge demand for it, but now we're starting to see stronger demand and stronger futures prices," Heitmeier said.
London Metal Exchange copper warehouse inventories hit 75,100 tonnes on Tuesday, climbing steadily since bottoming out at a 31-year low of 25,525 tonnes in July. The New York Mercantile Exchange's COMEX copper inventories were unchanged at 9,722 tons in Monday's daily report.
Dealers quoted No 1 "barebright" copper scrap at even to 2 cents over COMEX copper for December delivery - slightly wider than prior quotes pegged at flat to 1 cent over.
Quotes for No 1 "burnt" were seen at 2 to 3 cents under December, from the previous month's 4 to 5 cents under.
Prices for No 2, or lower-grade, copper scrap were 14 to 16 cents under December, a shade wider than 14 to 15 cents below previously.
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