Operating rates at copper rod producers using copper cathode as raw material dropped sharply in Feb due to CNY holidays

Operating rates at copper rod producers using copper cathode as raw material plunged 26.61 percentage points on the month and 19.18 percentage points on the year to 42.05% in February, according to an SMM survey of 52 producers with a total capacity of 13.06 million mt/year. The rates were down 5.66 percentage points from January 2023. The average operating rates of large, medium-sized and small enterprises were 41.17%, 31.21%, and 48.30% respectively.

The average operating rate was 1.86 percentage points lower than expected.

In February, the operating rate fell sharply due to the CNY holiday. Downstream consumption missed the expected level, which dragged down new orders and thereby caused the operating rate to be lower than expected. According to SMM survey, most companies said that after the CNY holiday they were mainly fulfilling orders placed before CNY and long-term contracts. Downstream buyers only maintained on-demand purchases and high copper prices inhibited the recovery of downstream consumption. SMM data shows that the average monthly price spread between copper rod produced with copper scrap in Jiangxi and electric power rod in east China in February stood at 769 yuan/mt, with the highest in the month being 1,145 yuan/mt. The average price spread fell 464 yuan/mt from year-ago level and dropped 193 yuan/mt from January, meaning stronger advantage of copper rod produced with copper cathode in February.