- October-December contract quantities remain largely unchanged
- No. 1 copper wire availability limits supply commitments
- Weak brass grinding demand weighs on procurement
Japan’s copper and brass scrap market is entering the October-December contract period with quantities largely unchanged from the previous quarter, although supply and demand conditions are prompting downward adjustments in some contracts. Limited availability of No. 1 copper wire is restricting wholesalers’ ability to commit higher volumes, while weak purchasing interest in brass grinding is putting pressure on contract quantities.
Long-term contracts between copper rolling manufacturers and raw material wholesalers are negotiated quarterly, with both sides agreeing on volume and price conditions. The outcome of the October-December negotiations is expected to influence domestic scrap supply and procurement patterns during the quarter.
While consumers sought higher volumes compared with the previous quarter, wholesalers indicated that securing sufficient material would be difficult under current market conditions. Some therefore opted for lower commitments rather than risk having to purchase additional scrap at higher prices to fulfil contractual requirements.
No. 1 copper wire remains supply constrained
The availability of No. 1 copper wire has remained weak for an extended period despite the market trading at record-high levels. Limited cargo movement and low market inventories have made it difficult for wholesalers to collect sufficient material.
The supply constraint is particularly significant because higher consumer demand is not being matched by increased scrap generation. One wholesaler indicated that consumers had requested higher volumes for the October-December period, but the supplier judged that it would be difficult to handle those quantities over the following three months.
This suggests that the issue is not simply price-driven. Even at elevated market levels, physical availability remains a key constraint, limiting wholesalers’ willingness to increase contractual commitments.
Brass grinding faces weaker demand
According to the Japan Copper Grinding Institute, brass bar production in August remained steady and increased 6% y-o-y. However, the accompanying raw material demand appears to have entered an adjustment phase, reducing manufacturers’ appetite for additional brass scrap.
For wholesalers, weaker brass grinding demand creates a different risk from the No. 1 copper wire shortage. Lower deliveries could leave suppliers carrying excess material, particularly where contractual volumes were established before demand softened.
A wholesaler noted that even a small reduction in deliveries from manufacturers could result in excess inventory accumulating at the supplier level. This has increased concern among wholesalers that brass milling contracts could become burdensome if actual consumption remains below agreed volumes.
Contract structure exposes different supply risks
The negotiations highlight a divergence between copper and brass scrap markets.
For No. 1 copper wire, wholesalers are reluctant to commit to higher volumes because physical collection is difficult. For brass grinding, manufacturers are seeking lower quantities because purchasing demand is weak.
This means the October-December contract market is being shaped by both supply-side and demand-side constraints. Copper scrap availability is limiting the ability to respond to higher demand, while weaker brass consumption is reducing the volume that manufacturers are prepared to absorb.
Brass milling has also faced lower price terms under long-term contracts this year, adding pressure on wholesalers already concerned about excess material.
Market implications
The October-December settlements suggest that Japan’s domestic copper and brass scrap market may remain uneven across grades. No. 1 copper wire could remain relatively tight if scrap generation and market circulation do not improve, while brass grinding may face weaker procurement and inventory-management pressures.
For wholesalers, the priority is likely to remain balancing contractual commitments with actual physical availability. Higher commitments for scarce copper grades could increase procurement risk, while maintaining larger brass volumes could expose suppliers to excess inventory if manufacturers continue to reduce purchases.
The next round of quarterly negotiations is scheduled to begin in December. Developments during the October-December period will therefore provide an important indication of whether copper scrap supply constraints ease and whether brass demand recovers sufficiently to support existing contract volumes.
Note: This article has been written in accordance with a content exchange agreement between Japan Metal Daily and BigMint.
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