Washington (Platts)--29Nov2012/515 pm EST/2215 GMT

Spreads for US copper scrap narrowed slightly this week based on reported sales and a downturn in copper futures that reversed itself later in the week.

Discounts for No. 2 birch/cliff, the grade normally favored by Chinese mills and other overseas buyers, narrowed to March COMEX minus 35 cents/lb, delivered FAS, from March COMEX minus 37 cents last week.

Sources continued to characterize No. 2 sales to China as steady but relatively light, despite the upcoming Lunar New Year in early February. Shipping containers of scrap typically take about 45 days to arrive in South China ports.

When asked if Chinese buyers had stepped up their buying, one large scrap processor/merchant in the upper Midwest said, "not yet."

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"I think at 350 cents/lb, it's still a little too expensive for them," the trader said. "I was surprised that when it was 340 cents, they didn't come into the market. I thought they would."

Discounts for mixed loads of No. 1 burnt wire/pipe and tubing slipped to March COMEX minus 19 cents, delivered US, from March COMEX minus 22 cents last week on weak demand, as US mills kept their buying at a minimum for year-end accounting purposes.

A large processor/trader in the Midwest put No. 1 spreads at March COMEX minus 19-20 cents, but said European mills had been buying in "considerable volume," as they had in recent weeks.

European sources describe the current scrap supply situation in Europe as "tight," leading some market players to theorize that with the European cathode market tight and US scrap demand at a standstill, scrap was being bought and sold to fill the gap.

Although US demand for high-grade bare bright scrap remained steady, spreads narrowed to March COMEX minus 8 cents/lb, delivered US, from March COMEX minus 10 cents last week.

One scrap wholesaler in the Northeast saw bare bright discounts at March COMEX minus 8-9 cents. Things have been relatively status quo, and maybe a little tighter even," he said.

The processor/trader in the upper Midwest cited earlier said he sold at March COMEX minus 6-7 cents, delivered US this week.

"There's still good domestic demand, and the Asian markets haven't been that aggressive, at least not on No. 1 and bare bright," he said, though he added that many large US mills were not buying heavily.

--Nick Jonson, nick_jonson@platts.com


--Ben Kilbey, ben_kilbey@platts.com
--Edited by Richard Rubin, richard_rubin@platts.com

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