Every copper scrap transaction references the COMEX copper price, but no scrap grade trades at exactly the COMEX number. The difference, called the spread or discount, varies by grade, region, market conditions, and volume. Understanding this spread is critical for scrap dealers, copper consumers, and anyone building pricing models for the copper recycling market.
How COMEX Copper Works
The COMEX copper futures contract, traded on the CME Group, represents 25,000 pounds of Grade A copper cathode. It is the primary benchmark for North American copper pricing. When industry participants say copper is at $4.15, they mean the COMEX nearby futures price.
COMEX copper is refined metal with 99.99% purity. Scrap copper, even at the highest grades, requires processing to reach this purity level. The spread between scrap and COMEX reflects this processing cost plus market supply and demand dynamics.
Grade-Specific Spreads
Bare Bright (BARLEY) trades closest to COMEX, typically at 90 to 95 percent of the COMEX price. This is the purest form of copper scrap, requiring minimal processing. When COMEX copper is $4.00 per pound, Bare Bright scrap typically trades between $3.60 and $3.80.
Number 1 Copper Tubing (CANDY) trades at 85 to 92 percent of COMEX. The additional processing required to remove solder, fittings, and prepare the material for melting widens the spread slightly.
Number 2 Copper (BIRCH) trades at 80 to 88 percent of COMEX. The wider allowance for oxidation, coatings, and mixed forms creates more processing cost and a bigger discount.
Insulated Copper Wire (DRUID) has the widest spread because the value depends on the recovery rate. A wire with 70 percent copper content by weight effectively trades at 70 percent of the Number 2 Copper price, which is itself discounted from COMEX.
What Moves the Spread
When scrap supply is tight, spreads narrow as buyers compete for material. This often happens during strong construction activity when demolition and renovation generate copper scrap but also consume it. Conversely, when a wave of scrap hits the market from a large demolition project or industrial decommissioning, spreads widen as buyers have more options.
Regional factors also matter. Areas with more copper processors have tighter spreads because competition for feedstock is more intense. Remote areas with fewer buyers see wider spreads.
Using Spread Data
For developers building pricing tools, expressing scrap copper prices both as an absolute number and as a percentage of COMEX provides valuable context. A drop in absolute price might look alarming, but if the spread remained constant, it simply means the underlying copper market moved. Conversely, a stable absolute price with a widening spread signals weakening demand in the scrap market specifically.
The ScrapMetal API provides scrap copper prices that you can compare against COMEX copper data available from CME Group's free delayed data. Combining both data sources in your application gives users the full picture.