SHANGHAI (Reuters) – China will import even more off-exchange refined copper this year, according to analysts and traders, as output from the Congo booms and users look to alleviate shortages and head off a potential disruption to supplies of U.S. scrap.
The expected surge illustrates the growing reliance of China, the world’s biggest copper user, on refined metal supply from the Democratic Republic of Congo (DRC), now the world’s second-largest copper producer after years of massive Chinese mining investment there.
Shipments from Congo are typically equivalent grade (EQ) copper because producers have not paid to register it on an exchange such as the Shanghai Futures Exchange, meaning it can’t fulfil contracts in that market. That makes EQ copper comparatively cheaper than registered metal even though it meets the same quality specifications.
Six analysts and traders involved in the Chinese copper market said they expect EQ copper’s import volume and market share to grow again this year. EQ copper accounted for 62% of China’s refined copper imports last year, up from just under half in 2022, according to Shanghai Metals Market (SMM).
The refined copper market remains tight with global demand outpacing supply in 9 of 12 months in 2024, according to data from the World Bureau of Metal Statistics. Citigroup forecasts a supply deficit of 136,000 metric tons in 2025.
The lower-priced high-quality EQ copper is a big draw for small- to medium-sized Chinese wire and rod manufacturers, who are getting squeezed by the high prices for refined copper. Prices on the London Metal Exchange (LME) have increased by 9% since the start of this year and are up 18% from a year ago.
“EQ has been quite popular in China over the past few years. The main reason behind this is that the quality of EQ copper matches that of registered brands while at a lower price,” a copper trader said.
Almost three-quarters of Congo’s 2 million tons of refined copper output went to China last year, according to LSEG and Chinese customs data. The bulk of that was EQ copper, according to SMM.
Refined copper imports from the DRC to China in 2024 were seven times higher than in 2019.
The premium of EQ copper with a metal content of a mininum 99.9935% over the LME price was $3-$15 per tonne, according to Fastmarkets’ data on March 4. That compared to a premium of $50-$80 per tonne for registered copper with the same metal content.
That discount reflects the absence of registration fees but also the premium registered copper commands because its purity and quality is recognised by an exchange.
Several traders said they had never heard of quality issues with EQ copper.
The increasing reliance on Congolese supply could offset a potential loss of U.S. scrap imports amid President Donald Trump’s tariff probe into copper, which may lead to higher metal prices.
China imported one-fifth of its copper scrap from the U.S. last year, or nearly 440,000 tons. However, imports are expected to fall and some traders have already suspended purchases over concerns the trade war could raise costs.
“The supply of refined copper, including scrap, concentrate, anode and blister, is still tight. We therefore expect higher imports of plentiful refined copper, including EQ copper to partly compensate for this tightness in other raw materials,” Jonathan Barnes, principal analyst at metals research company Project Blue said.
(Reporting by Shanghai newsroom, Editing by Lewis Jackson and Christian Schmollinger)
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