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This week, China’s brass market remained in a pattern of volatile high raw material prices, sluggish off-season downstream demand and widening supply-demand divergence. Sustained high prices of upstream electrolytic copper and zinc have pushed up production costs of brass alloys. Midstream manufacturers of brass rods, brass sheets and strips reported a slight drop in operating rates, while tight supply of recycled brass raw materials persisted. Downstream demand from bathroom hardware, refrigeration and traditional auto parts sectors fell into the seasonal low, whereas demand for high-precision brass materials related to new energy maintained resilience. Market transactions were mainly based on immediate demand, with low willingness for speculative restocking. Industry profits kept being squeezed by raw material costs. In the short term, brass prices will move in tandem with copper and zinc, and are unlikely to develop independent trends.
On the raw material front, the main Shanghai copper contract traded in the range of 105,100 – 105,800 yuan/ton this week, while LME copper held steadily above USD 13,750/ton. The fundamental tight global copper mine supply remains intact. Production disruptions in Chilean mining areas, persistently low copper concentrate processing fees and smelter maintenance curbed the growth of primary copper output. Scrap copper circulation remains a prominent industry pain point. Recycled brass manufacturers generally reported shortages of tax-included scrap supplies, with raw material inventories kept at a low level of 3–4 days. Intensified procurement competition and fluctuating price gaps between refined copper and scrap copper further erode the production advantages of recycled brass. Zinc prices also fluctuated at high levels. Elevated costs of both copper and zinc constitute the core factor weighing on profitability of brass processors. Most brass fabricators adopt a “purchase upon order” strategy to avoid inventory risks caused by sharp raw material price swings.
In terms of production and circulation, the operating rate of sampled domestic brass enterprises edged down week-on-week. Sustained high temperatures coupled with insufficient end-user orders dampened production enthusiasm among small and medium-sized brass rod and copper strip manufacturers, and some factories arranged moderate production cuts and maintenance. Finished goods inventories kept accumulating, staying above the 5-day level for sampled enterprises with slow destocking progress. Spot market transactions showed obvious polarization: demand for conventional H62 and H59 brass rods remained weak with greater negotiation room; orders for high-precision brass strips and bismuth-containing eco-friendly brass used in new energy vehicle thermal management and connectors stayed relatively stable, and processing fees remained firm. For exports, shipments of brass profiles showed mixed performance. Orders for infrastructure hardware from ASEAN and the Middle East offered support, while demand from Europe and the US remained subdued. Export manufacturers faced persistent price pressure from overseas buyers, compressing export profit margins.
Downstream end-user demand continued to display typical off-season characteristics. The plumbing, bathroom and valve sectors entered the low-demand season. Distributors remained cautious about restocking and prioritized consuming existing inventories, resulting in limited new orders. Output of household air conditioning and refrigeration components stayed steady, yet enterprises tried their best to control raw material inventories and rarely locked materials in advance. Weak demand for traditional internal combustion engine vehicle parts dragged down consumption of general brass forgings. Structural bright spots lie in the new energy sector. Demand for high-precision brass materials for new energy vehicle electronic control systems, heat dissipation components and photovoltaic terminal blocks maintained steady growth, forming one of the few sources of demand growth for the industry. Overall, demand growth from emerging industries cannot offset falling consumption in real estate-related sectors and traditional manufacturing, making a broad recovery in brass consumption unlikely in the near term.
In terms of market sentiment, the whole industrial chain maintains a strong wait-and-see attitude. Downstream buyers fear risks brought by high raw material prices and stick to small-batch, high-frequency procurement instead of large-scale stockpiling. Midstream brass processors face pressures from both ends: rising upstream raw material costs and difficulties in passing price hikes downstream, leading to sustained pressure on processing fees. Traders adopted conservative operations, generally avoiding long-term inventory building and opting for fast in-and-out short-term trading, resulting in inadequate market liquidity. On the capital side, volatile macro sentiment across commodity markets and shifting expectations around the Federal Reserve’s monetary policy continuously disturb non-ferrous metal futures. Greater volatility in copper and zinc prices further increases uncertainties in brass market trading.
Market outlook for the coming week: Brass prices will continue to follow movements of copper and zinc, and are expected to fluctuate at high levels. On the supply side, tight scrap copper supply will likely persist in the short run, offering solid underlying support to raw material costs. On the demand side, traditional industries will remain in the off-season, and periodic restocking is not expected until ahead of the “Golden September” peak season. A notable improvement in demand is unlikely in the short term, leaving limited upside for brass prices.