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A week has passed since the post-Chinese New Year resumption of work, and the copper billet industry has gradually resumed production. However, with the futures market rising after the holiday and end-user enterprises not yet fully recovered, how is the current performance of the copper billet industry and its upstream and downstream sectors?
According to SMM, most copper billet enterprises resumed operations on the eighth day of the first lunar month, primarily large-scale enterprises. Local employees have mostly returned to work, while the remaining workers are expected to return after the Lantern Festival. Factories are expected to return to normal operating levels in the coming days, while smaller enterprises are resuming at a slower pace.
On the raw material side, the futures market rose after the holiday. However, the strong performance of LME copper led to an inverted price structure for secondary copper raw materials, reducing the purchasing enthusiasm of some domestic secondary copper traders, who are relying more on pre-holiday inventory to fulfill current orders. Additionally, SMM reports that some low-inventory traders are considering placing orders first and setting prices after the goods arrive at the port to cope with the high copper market. However, overseas suppliers are not receptive to this approach and prefer to quote based on Comex copper prices minus a discount. The significant price spread between Comex copper and LME copper has also dampened the enthusiasm of traders and enterprises for imports. Meanwhile, tariffs imposed during the Trump administration continue to have an impact, causing some traders to avoid purchasing US secondary copper raw materials. In the long term, if copper prices remain high, the supply of secondary brass alloy raw materials in the market may tighten as downstream production gradually resumes.
On the consumption side, SMM estimates that the operating rate of copper billet enterprises in February 2025 will be 48.33%, up 6.64% MoM, indicating a slow recovery. By scale, large brass billet enterprises report moderate order performance, particularly in the valve and water distributor sectors. In contrast, small and medium-sized enterprises are experiencing slower recovery due to later resumption of work and incomplete return of workers, resulting in limited order volumes.
Additionally, SMM reports that post-holiday copper price increases have kept brass billet prices at high levels. However, due to demand-side constraints, the upward momentum for brass prices appears limited. Nevertheless, starting next week, as downstream enterprises across regions gradually resume production and February remains the traditional peak sales season for the refrigeration industry, the pace of cargo pick-up is expected to accelerate, and market demand is likely to enter a recovery trajectory.
