Chinese scrap metal buying in EU up sharply-VDM

HANOVER, May 7 (Reuters) - Chinese scrap metal buying in the European Union has risen sharply in the last two months, the association of German metals traders said on Thursday, partly due to lower prices in Europe than on the Shanghai futures market. Copper scrap was the main focus of Chinese buying interest although there were also large purchases of aluminium scrap, VDM vice-chairman Hans-Gerhard Hoffmann said. "Exports of copper scrap are taking place in very large volumes," he said at a press conference at the VDM's annual meeting. The buying was also due to apparent Chinese government support for metal imports, he said. Shanghai copper prices had recently been $300 to $400 a tonne above London Metal Exchange (LME) prices which set the scrap metal market in Europe, he said. Ocean shipping rates for containers from Europe to China had also dropped dramatically, providing a further stimulus to Chinese scrap buying in Europe. "Ocean shipping costs are now so low they are hardly a significant factor in the cost calculation when Chinese buy scrap in Europe," Hoffman said. The heavy Chinese scrap buying meant physical supplies for some sectors such as cable recycling had been tight and a lack of scrap had disrupted recycling work, making it difficult to deliver metal promised, VDM chairwoman Rita Dapont said. European physical lead demand was also stable to good, VDM board member Jost Hinrich Stachow said. A pickup in German automobile production due to the government's economic stimulus incentives to buy new cars had helped demand for lead from battery producers. Export demand for lead scrap was also strong, mainly due to buyers in India and south east Asia, not China, Stachow said.