Operating rates at copper rod producers using copper cathode as raw material rose 4.67 percentage points on the month and 10.54 percentage points on the year to 76.4% in May, according to an SMM survey of 52 producers with a total capacity of 12.73 million mt/year. The average operating rate of large, medium-sized and small enterprises was 78.19%, 75.32% and 60.21% respectively.
In May, the operating rates far exceeded the previous expectation of 70.77%, hitting a new high this year. The plunge in copper prices significantly improved buying interest of downstream cable and enamelled wire enterprises, especially when copper prices fell below 64,000 yuan/mt. Due to the low inventory of finished products of most copper rod enterprises after the Labour Day holidays and the rapid increase in orders, copper rod plants accelerated production. In addition, the narrowing of the price difference between copper rod produced with copper cathode and with copper scrap continued to boost consumption of the former. According to SMM data, the monthly average price difference in May was 514 yuan/mt. Prices of copper rod produced with copper scrap stood above SHFE front-month copper contract prices for an extended period, turning wire and cable plants to purchase copper cathode rod.
