Copper Prices Keep Hitting New Highs, Copper Scrap Traders Keep Selling [SMM Copper Scrap Weekly Review]

SMM, September 11:

      Copper prices started the week at 109,630 yuan/mt. On September 8, driven by short squeezes outside China, prices quickly broke through 110,000 yuan/mt, hitting a high of 111,340 yuan/mt, and then continued to climb, closing at 112,290 yuan/mt on September 10, approaching the 113,000 yuan/mt mark, with a weekly gain of more than 2,600 yuan/mt.

      The rapid rise in copper prices significantly boosted sales and orders for secondary copper rod. On September 8, secondary copper rod sales were strong, and many enterprises reported that subsequent orders would need to be scheduled for production. On September 9, over the past two days, secondary copper rod enterprises took on a considerable number of new orders. With copper prices maintaining an upward trend, enterprises worried that high raw material prices later would cause sales losses, so they were more active in purchasing during the day. The price difference between copper cathode rod and secondary copper rod widened from 1,680 yuan/mt at the start of the week to 2,120 yuan/mt and then further to a high of 2,200 yuan/mt, with the cost advantage of secondary copper rod continuing to stand out. However, entering September 10, as raw material procurement costs kept increasing, secondary copper rod enterprises had to turn cautious, with order intake falling from the previous day and market trading activity clearly pulling back. Throughout the week, the purchasing sentiment index remained in a low range of 1.73-1.8, indicating that although rod enterprises had order support, their purchasing strategies were highly cautious. They were only briefly active when worried about further raw material price increases, and once cost pressure reached their tolerance limit, they quickly shifted to a wait-and-see stance.

      On the raw material side, after traders sold into the price strength, inventories were quickly depleted, and by the weekend they shifted to holding back from selling and holding prices firm. Combined with high invoice tax rates, the increase in domestic tax-exclusive raw material prices was limited, while tax-inclusive raw material costs stayed high. As a result, actual procurement costs for secondary copper rod enterprises continued to rise. Ultimately, as copper prices approached 113,000 yuan/mt, enterprises were forced to turn cautious due to the risk of losses, and trading shifted from hot to cold.