Chinese demand for copper scrap is likely to decline in the next few months with smelters' sales already weak and buyers wary about booking material with metal prices falling, an executive at recycler Uni-All Group said on Wednesday. "My projection is that the orders will diminish for the rest of this year. My customers' interest in buying is diminishing. They are in a holding path," David Chiao, vice president of the Atlanta-based metal recycler told Reuters at the BIR scrap conference.
Chiao is the China representative on the BIR board for non-ferrous metals. "Scrap consumers in China are not buying much at all as they expect commodity prices to fall further due to uncertainty in the euro zone which is putting pressure on the euro against the dollar," Chiao said.
Still, he said even if demand subsides, He expects scrap prices to hold up as their current level is already discouraging scrap collection and keeping supply tight. If China's economic growth declines to below 8 percent for the first time in 10 years as many expect, Chinese domestic consumption would be badly affected.
Chinese copper and brass smelters in fact are suffering already as they are short of orders and therefore are buying only what is strictly needed while avoiding stockpiling, Chiao said. "My customers used to buy hundreds of tonnes at a time and now often they buy only 20 tonnes or so. "Also, the Chinese lenders are very cautious. They are holding financial requirements very high so even if customers want to buy, they might not have the finance available.