LONDON, April 21 Reuters Supplies of copper scrap will jump this year due to decade high prices, but are unlikely to come fast enough to meet robust demand, leaving shortages that are expected to trigger stock draws and further price gains.
Copper prices around 9,400 a tonne are close to 9,617 hit in February, the highest since August 2011 and more than double the levels seen in March last year, when manufacturing activity crashed due to COVID lockdowns.
Scrap typically accounts for about a third of global copper supplies at around 30 million tonnes, but quantities tend to vary according to prices.
Scrap supplies are unlikely to rise as quickly as the market needs, given logistical constraints and an 8month lag between price strength and copper scrap coming to market for processing, said Citi analyst Max Layton.
The market needs about 10.8 million tonnes of scrap this year compared with 9.3 million tonnes in 2019. Expect major refined metal inventory draws over the next 6 months.
Citi expects global demand for the metal used widely in power and construction to grow 6.5 this year to 24.75 million tonnes, and sees a deficit of 521,000 tonnes.
Copper stocks held by producers, consumers and Chinas state stockpiler are significant, but difficult to monitor.
For clues to draws, the market will watch stocks in London Metal Exchangeregistered warehouses and those monitored by the Shanghai Futures Exchange, which currently total more than 360,000 tonnes .
Stocks are…