SMM News on May 30:
According to SMM survey data, the operating rate of secondary copper rod this week was 27.31%, up 5.17 percentage points WoW and down 7.2 percentage points YoY. Meanwhile, the average price spread between copper cathode rod and secondary copper rod was 1,089 yuan/mt this week, widening by 7 yuan/mt WoW. In addition, the average discount of secondary copper rod in Jiangxi against copper futures was 414 yuan/mt, widening by 226 yuan/mt WoW.
Based on SMM's calculations using the gross profit model for secondary copper rod sales, the gross profit for the week was -342 yuan/mt, widening by 9 yuan/mt WoW. Although secondary copper rod sales remain unprofitable, due to improved raw material supply, many secondary copper rod enterprises have increased their operating days. The finished product inventories of weekly sample secondary copper rod enterprises stood at 3,200 mt, up 650 mt WoW. Secondary copper rod enterprises indicated that earlier, due to tight raw material supply and unprofitable sales, the market supply of secondary copper rod was limited. After increasing production this week, the tight supply of secondary copper rod could be temporarily alleviated. However, secondary copper rod enterprises expect that downstream stockpiling sentiment will be average before the holiday, and if copper prices rise after the holiday, it could drive downstream restocking sentiment.
Looking ahead to next week, with the Dragon Boat Festival holiday lasting only one day, it will not significantly impact the procurement and production arrangements for secondary copper rod. Given sufficient raw material inventories, the operating rate of secondary copper rod is expected to be 30.49% next week.
