Confused Copper Scrap Price System in Japan

Japanese copper scrap price mechanism is changing when the indicative offshore and domestic copper ingot price surge in short term. Domestic copper scrap has traditional price system. No.1 copper wire scrap, which is used as substitute of electrolytic copper, is the highest grade followed by no.1 heavy copper scrap, no.2 heavy copper scrap and light copper scrap in decreasing order. The order is confused these days since March when no.2 heavy copper scrap price surged more than other grades. The price exceeded no.1 heavy copper scrap after brass bar makers purchased the no.2 grade at premium price to secure materials for output increase. The unprecedented move reflects only part of tight supply condition in particular application and the market is still under traditional system. However, other grades’ price are also against traditional system when brass scrap price meets tin containing bronze scrap, which was higher than brass scrap, copper nugget price exceeded no.1 copper wire scrap price and other price gaps between low and high grades are getting narrower. No.1 copper wire scrap price is higher than electrolytic copper price in some cases. Major rolled copper makers get electrolytic copper arrival at advanced purchased lower price in futures market under surging scrap price. Some rolled copper makers use 600 yen per kilogram of electrolytic copper compared with more than 700 yen of no.1 copper wire scrap depending on the condition and products mix. Such reversal is recognized as onetime move under abnormal market. Some makers with heavy consumption of electrolytic copper could shift to electrolytic copper from scrap. Offshore buyers increase to buy Japanese high grade copper scrap including brass turning scrap along with lower grade scrap as reported. Domestic interests expected domestic users could prevent such move by increasing purchase price. Domestic brass bar makers increased the purchase price earlier the year to compete with export price and seemed to succeed to secure requirement. However, brass turning scrap export exceeded 2,000 tonnes for South Korea in March, according to Ministry of Finance. The export still continues with fixed route though the volume halved from the peak.