India: Copper scrap imports decline marginally m-o-m in April'24

In the copper scrap category, India's imports decreased from 21,421 t in March 2024 to 21,058 t in April, marking a slight decline of 1.7%.

The ongoing elections likely disrupted business operations, causing companies to be cautious about imports due to financial instability and unpredictable market conditions amid LME price fluctuations which touched $10,000/t levels i.e. a two- year high.

Impact of LME price surge

In April, the price of copper for three-month delivery on the London Metal Exchange (LME) rose from $8,788/t in March to $9,660/t in April. This price increase of approximately 9.9% m-o-m contributed to the overall decline in copper scrap imports.

Higher LME prices make imported copper scrap more expensive, prompting domestic buyers to seek alternative sources such as local scrap, or to reduce their consumption temporarily. This price hike is a significant factor in the 1.7% decrease in copper scrap imports in April, as it likely influenced purchasing decisions and import volumes in the domestic market.

Copper scrap imports by country

In March, Germany led the way in copper scrap exports, totalling 2,989 t. By April, this figure rose by 10.2% to 3,294 t, indicating a notable increase in export activity. Saudi Arabia followed suit, with exports climbing by 17.9% from 2,652 t in March to 3,127 t in April. There was a positive trend in copper scrap exports for both Germany and Saudi Arabia during this period.

On the other hand, the United Kingdom experienced a significant decline in copper scrap exports from March to April. Starting at 2,476 t, exports dropped 19.8% to 1,986 t by April, reflecting a substantial decrease in volumes. Similarly, the United States saw a downturn, with exports decreasing by 8.5% from 2,556 t in March to 2,338 t in April.

These contrasting trends highlight a challenging period for copper scrap exports in the United Kingdom and the United States during this timeframe leading to marginal drop in exports.

Grade wise scrap imports

In April, copper scrap imports showed diverse movements across grades. Despite a 13.5% decline, Brass Honey remained the top imported grade at 7,575 t. Conversely, Druid experienced an 11.2% increase, reaching 5,321 t. Berry maintained stability at 1,489 t, while Birch surged by 15.3% to 3,074 t m-o-m.

Market dynamics, price negotiations

In April, while sellers took advantage of high LME prices to offer higher rates, buyers managed to secure Birch Cliff at reasonable prices. Sellers from western countries initially offered prices at 92-92.5% of LME prices, but after negotiations, buyers were able to secure deals at 91% of LME prices. This pushed Birch Cliff imports higher compared to other grades.

Why Brass Honey scrap imports declined?

However, the top-imported Brass Honey scrap faced a decline because buyers in the Far East were bidding $80-90/t more than those in India. As a result, material from the Middle East, and a few suppliers from the western countries preferred diverting material to China and other Far East countries, with prices up to 66% of LME prices. In contrast, Indian buyers were only willing to pay 60-61% of LME prices, leading to a drop in imports.

However European sellers were able to supply material at 62% of LME leading to a slight increase in volumes from this region. Germany led with 2,628 t in March, slightly increasing to 2,788 t in April. In contrast, the United Kingdom experienced a notable decrease from 1,321 t in March to 806 t in April.

BigMint's assessment of domestic copper armature average price for April has been reported at INR 767,000/t exy-Delhi, an increase of 9.3% m-o-m.

Copper scrap imports by region

In April, copper scrap imports showed significant regional variations in India. Delhi saw an increase of 36%, with imports rising from 1,007 t in March to 1,370 t, as the major contributions were from birch and berry material totalling more than 1000 t.

Gujarat experienced a decrease of 17%, with imports falling to 7,667 t in April from 9,209 t. Karnataka reported a complete halt in imports, dropping from 50 t in March to zero in April. Meanwhile, Maharashtra saw a substantial 39% increase, with imports rising from 2,517 t to 3,497 t.

The reduction in imports by key regions like Gujarat could be due to more reliance on local scrap sources. Additionally, the complete halt in imports in Karnataka suggests regional supply chain issues or a temporary drop in local manufacturing needs.