China to import more off-exchange refined copper as Congo’s output surges

Credit: Reuters/NAN

Analysts on Wednesday predicted that China would import more off-exchange refined copper as output from the Democratic Republic of Congo (DRC) increases, and users seek to alleviate shortages and avert potential disruptions to U.S. scrap supplies.

This expected surge highlights China’s growing dependence on refined metal supplies from the DRC, the world’s second-largest copper producer after years of significant Chinese mining investment.

Shipments from Congo are typically classified as equivalent grade (EQ) copper because producers have not registered it on an exchange, such as the Shanghai Futures Exchange, which prevents it from fulfilling contracts on that market.

However, EQ copper is generally cheaper than registered metal, even though it meets the same quality specifications.

Six analysts and traders involved in the Chinese copper market expect the import volume and market share of EQ copper to increase again this year.

EQ copper accounted for 62 per cent of China’s refined copper imports in 2024, up from just under half in 2022, according to Shanghai Metals Market (SMM).

Data from the World Bureau of Metal Statistics reveals that the refined copper market remains tight, with global demand outpacing supply for nine months in 2024. Citigroup forecasts a supply deficit of 136,000 metric tons in 2025.

The lower-priced, high-quality EQ copper is particularly attractive to small and medium-sized Chinese wire and rod manufacturers, who are being squeezed by high refined copper prices.

Prices on the London Metal Exchange (LME) have risen 9 per cent since the start of the year and are up 18 per cent 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,” said a copper trader.

According to LSEG and Chinese customs data, nearly three-quarters of Congo’s two million tons of refined copper output went to China in 2024. Refined copper imports from the DRC to China in 2024 were seven times higher than in 2019.

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The premium of EQ copper, with a minimum metal content of 99.9935 per cent, over the LME price was 3-15 dollars per ton, according to Fastmarkets’ data from March 4.

This compares to a premium of 50-80 dollars per ton for registered copper with the same metal content.

The discount on EQ copper reflects the absence of registration fees but also the premium that registered copper commands due to its exchange-recognised purity and quality.

Several traders reported that they had never encountered quality issues with EQ copper.

China’s increasing reliance on Congolese copper could offset a potential reduction in U.S. scrap imports amid President Donald Trump’s tariff probe into copper, which could lead to higher metal prices.

China imported one-fifth of its copper scrap from the U.S. in 2024, nearly 440,000 tons.

However, imports are expected to fall, and some traders have already suspended purchases due to concerns that the trade war could raise costs.

Jonathan Barnes, principal analyst at metals research company Project Blue, stated, “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.”