China issues draft rules to allow more recycled copper, aluminum imports
China has been looking to raise the usage of recycled metals as part of an efforts to lower carbon emission.
A key measure of Chinese copper demand has returned to positive territory for the first time in almost two months as users stepped up purchases.
The premium paid on imported refined copper rose to $3 a ton on Friday, according to data from Shanghai Metals Market. Copper in Shanghai’s tax-free bonded zone had been selling at a highly unusual discount to London Metal Exchange prices since May, after buyers balked at paying record copper prices amid soft underlying demand for the metal.
Copper’s surge to a record on wave of speculative money has run out of steam in recent months as the market’s focus shifted back to weakness in China, the biggest consumer. There have been tentative early signs that the market is firming in recent weeks, with the Yangshan premium turning positive again, while copper stockpiles in China fell last month after surging in May.
Still, there remains a question mark over whether the uptick in purchases is simply a result of delayed buying, versus a real improvement in underlying demand. The latest data from the Shanghai Futures Exchange shows copper inventories have edged up again in the past week, in a negative signal for the market.
“Factories have stepped up buying to replenish inventories,” said Ji Xianfei, an analyst with Guotai Junan Futures Co. Purchases picked up after copper slumped from a record high, though end-user consumption is yet to see a meaningful rebound during the summer lull, he added.
Copper rose 1% to $9,976.50 a ton on the London Metal Exchange as of 2:14 p.m. Other metals have also strengthened, with zinc and tin both heading for their fourth weekly gains.
On Friday, US economic data showed hiring and wage growth stepped down in June, bolstering prospects that the Federal Reserve will begin cutting interest rates in the coming months.
Read More: Copper price to retest $10,000/t soon, says Citi
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