Copper is a metal that is recycled with no loss in quality. Copper can be melted down and formed into new products over and over without any loss in quality of the original metal. This is why copper scraps can be valued at up to 90 percent of the cost of the original copper. Not only does selling copper scraps for recycling return a good profit but it also has a positive impact on the environment by saving energy and reducing the waste resulting from mining virgin copper. Before scrap copper can be sold, it is necessary to sort and consolidate it according to a grading system.
An individual who grasps the law can have some knowledge of the future trend. Copper recycling market sometimes just like weather. Which factors influence the price of copper scrap?
1.The Copper Grade
This is because bright copper with little impurity substance can be directly smelted while that with many impurities needs another process, that is, sorting process.
Briefly, mineral grade refers to the percentage content of minerals in the ore.The higher ratio, the less impurity. So it possesses the lower
smelting difficulty, higher smelting production and more exploitation value. This kind of circumstance is suitable for the scrap copper industry. The higher copper content, the high price. Due to the requirements of industrialization, a complete set of smelting equipment is designed for certain mineral grade, which means that if the height of the ore grade does not meet the equipment requirements, it cannot then be smelted, so low grade is not of exploitation value of mineral resources, this is the grade demands of mineral deposits.
2.Supply and Demand Situation
The second and maybe the most important reason is demand and supply situation. For example, the price of copper scrap in some coastal places is lower because of the import of abroad copper scrap while the price of that in inland places is higher because comparatively inadequate supply.Then we will talk about them in details.
A. One of the biggest factors affecting the price of copper scrap is the demand. Copper is a material used in a great deal of applications, including optical fiber and cable, Hardware & Building Materials, electronic communications, electronic components, electric appliance, automotive, aerospace, military weapons, etc. If economies are growing, then the demand for these fields also grows along with it. Building, for example, accounts for approximately half of all copper use, with engineering accounting for nearly 25 percent, and electrical applications accounting for approximately 17 percent. Growth in Asian economies in particular, which account for 50 percent of all copper use, is another important factor.
Copper scrap is a very significant factor in making the United States self sufficient in its overall consumption vs. production of copper. In 1995, U.S. mine production was 2,050.3 thousand short tons; 1,673.9 thousand short tons of copper in domestic scrap entered the stream giving a total copper consumption of 3,724.2 thousand short tons. Scrap provided 44.4% of the total copper consumed. As shown below, scrap consumption over the past 20 years has provided between 44 and 54.7% of the total copper consumed in the U.S. The intrinsic value of copper scrap drives this process. No. 1 copper scrap commands over 90% of the price of new refined copper.
B. Another factor affecting copper prices is the supply. While supply may increase or decrease over time, the trend tends to show an overall decrease in the amount copper being mined. Copper production comes mainly from America, Europe, and Asia, which combine for more than 90 percent of the copper produced in the world. As less copper is produced, the more precious of a commodity it becomes, and thus the higher copper prices tend to be. Counteracting this effect is the mining of more copper, finding new stores of copper, or finding other price-competitive materials that can take the place of copper.
The United States is a significant exporter of copper and copper alloy scrap as shown on Tables 3 and 8, and has been the world’s largest exporter of copper-based scrap since 1999. U.S. net exports of scrap in 2011 were estimated at 944,890 tons, up from a net export of around 62,700 tons in 1993, and 140,000 in 1997. The most significant U.S. scrap export destinations are in Western Europe and Asia.
Although the amounts have been declining since 1997, the United States also imports around 100,000 tons per year of scrap. The most important U.S. import sources of copper and copper alloy scrap in 2008 continued to be Canada (40%) and Mexico (35%). Scrap exports generally have been increasing since the early 1970’s.
The Supply and Demand Relations
The supply and demand relations should be observed: production, consumption, exports and imports, inventory;Supply and demand relations is the most direct factors that affect commodity prices.Supply = production + imports + inventories
Demand = consumption + exportsWhen supply > demand, prices drop; When supply < demand, prices go up;
When the supply is almost equal to the demand, the price will remain steady.
At the same time, purchasing power also influences the copper scrap. If the copper recycling factories has higher capacity utilization rate and has confidence about the future trend, they will have strong desire to purchase copper scrap. Sometimes, it will lead that transaction price is higher the average price in market. The price will be low if these factories are in bad situation.
DEFINITION OF ‘PURCHASING POWER’
Purchasing power (sometimes retroactively called adjusted for inflation) is the number of goods or services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it is probable that it would have been possible to buy a greater number of items than would today, indicating that one would have had a greater purchasing power in the 1950s.
A. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you’d be able to purchase.
B. In investment terms, the dollar amount of credit available to a customer to buy additional securities against the existing marginable securities in the brokerage account.
4. Production Cost
Last but not least, production cost is also a basis of deciding the goods price. When the production cost is at a high level, the price will go up, or the situation will be different. Of course, there are other factors which I would like to introduce in the following article.
Besides these factors, the international and domestic economic situation, import and export policy, tariffs, related commodities such as oil and gold price fluctuations will also affect copper scrap prices.
Knowing these rules is not to let us withdraw from copper recycling market, but to let us know how to face changing situation. Amisy copper granulator will be your reliable partner!