1. The LME 3-Month Copper Grade A Settlement
Almost every copper scrap quotation written in Europe is anchored to the LME 3-month Copper Grade A settlement, published in US dollars per metric tonne and re-fixed every London trading day at 12:30 GMT during the second Ring session. The number represents the spot value of refined Grade A copper cathode delivered to an LME-approved warehouse on the second working day after trade.
Scrap, by definition, is contaminated copper. To turn scrap back into a tradeable cathode, a secondary refiner must remelt, electrolyse, refine and cast the material. The discount between LME and the scrap price represents that recovery cost plus the refinery's margin and the exporter's commercial layer. Knowing the LME number means knowing 80% of what drives the quote in front of you.
2. Grade Discount Bands in 2026
The cleaner and more uniform the copper, the higher the percentage of LME the buyer pays. Indicative 2026 trading bands CIF Nhava Sheva:
Millberry (ISRI Barley, 99.95% Cu, bare bright uncoated wire 1/16" and over): 95–97% of LME. The tightest discount because recovery is essentially direct re-melt.
Berry / Candy (ISRI Berry/Candy, clean unalloyed copper wire under 1/16", 99.0% Cu): 93–95%.
Birch (ISRI Birch, clean heavy copper solids, 96% Cu): 90–92%.
Cliff (ISRI Cliff, mixed heavy copper, 94% Cu): 86–89%.
Copper wire chops (mechanically stripped, 95–98% Cu): 88–94% depending on shred quality.
Insulated copper cable (priced on recovered copper content): 78–84% of LME on recovered metal.
3. Why the Same Grade Trades at Different Discounts on Different Days
Grade discounts are not constant. They widen and tighten with refinery demand, container freight rates, the shape of the LME forward curve, and the relative balance between scrap availability and primary cathode price. When LME spikes, scrap discounts often widen briefly as refineries pause buying to clear inventory; when LME falls, scrap discounts can tighten as refineries lock in cheap feed.
A buyer comparing two offers should always reconcile the quoted USD/MT to the same LME date. An exporter quoting 'Millberry USD 9,200/MT CIF Mumbai' on a day when LME 3-month settles at USD 9,600 is offering 96% of LME — competitive. On a day when LME settles at USD 9,200, the same flat number is 100% of LME — there is no commercial story that justifies it.
4. The CIF Build-Up From LME to Final Number
A CIF quotation is built in four layers. Layer one: the LME 3-month cash settlement at the agreed date. Layer two: the grade discount (e.g. Millberry at -3.5% of LME). Layer three: freight and insurance from Rotterdam to the destination port (typically USD 700–1,100 per 20GP to Asian ports in 2026). Layer four: inspection and finance costs (USD 150–250 per container for SGS, plus LC issuance fees).
The supplier rolls all four layers into a single USD/MT CIF number. A transparent quotation breaks the layers out so the buyer can verify each. An opaque quotation gives only the final number and asks the buyer to take it on trust — a structural risk in counterparty selection.
5. FOB vs CIF and Who Carries Which Risk
FOB Rotterdam means the price covers material loaded on board the vessel at Rotterdam; the buyer arranges and pays for ocean freight, marine insurance and destination charges. CIF Nhava Sheva, CIF Haiphong, CIF Mersin and similar terms include freight and insurance to the named port.
FOB gives the buyer freight flexibility and is preferred when the buyer has a forwarding agreement or wants to consolidate multiple suppliers. CIF removes operational complexity and is preferred when the buyer wants a single landed number for their costing sheet. Risk of loss transfers at the ship's rail in both cases — the difference is who books and pays the carrier.
6. Hedging and Price-Fixing Mechanisms
Most physical copper scrap contracts in Europe fix the price on the day of contract signature using that day's LME cash settlement. The buyer then carries the LME risk from contract to vessel arrival. Larger volume buyers negotiate average pricing — for example, the average of LME cash settlements over the loading week or the second half of the month — to smooth exposure.
Sophisticated buyers hedge their book separately with LME futures or OTC swaps. Suppliers generally do not hedge on behalf of buyers because the trade flow is short — typically under 30 days from contract to vessel arrival — and because hedging introduces basis risk between the LME forward and the cash settlement used in the physical price.
7. Red Flags in Copper Scrap Quotations
Round flat numbers detached from LME — 'Millberry USD 9,000/MT, valid 30 days' — almost always indicate either a re-trade with hidden margin or an attempt to clear off-spec material. A live LME-anchored quotation cannot remain valid for 30 days.
No named ISRI grade — 'high-grade copper scrap' is not a specification. ISRI Barley, Berry, Birch, Cliff or written equivalent must appear in the contract.
No price-adjustment clause — every legitimate contract includes a deviation clause that adjusts the price if assay results show the material falls below the named ISRI specification beyond an agreed tolerance.
Refusal of third-party inspection — credible exporters routinely host SGS, Bureau Veritas, Intertek and CCIC. Refusal to allow inspection is a structural red flag.