SMM, September 23:
1. Survey Overview: Production Halts Widen, Stockpiling Intentions Generally Cautious
With the National Day holiday approaching, SMM conducted a survey on pre-holiday stockpiling and production arrangements among 19 secondary copper rod enterprises across eight provinces and cities, including Anhui, Hubei, Hebei, Tianjin, Guangdong, Jiangxi, Sichuan, and Henan, with a combined annual capacity of 2.19 million mt. The survey results show that the industry currently presents a stark "two extremes" pattern: nine enterprises are in a state of production halt, involving an annual capacity of 990,000 mt, accounting for approximately 45% of the total sample capacity; among enterprises maintaining production, raw material stockpiling is also generally cautious, with ten enterprises reporting zero raw material stockpiles, and the pre-holiday "stockpiling wave" did not materialize as expected.
2. Stockpiling Situation: Raw Material Restocking Clearly Divergent, Finished Product Inventories Generally Low
On the raw material side, only nine of the 19 sampled enterprises actually stockpiled, with a combined stockpiling volume of approximately 9,600 mt, and concentration was relatively high: a Hebei enterprise planned to stockpile around 5,000 mt each of raw materials and finished products, making it the most active producer in this survey, though it also admitted that "raw materials are currently not quite sufficient"; one enterprise each in Guangdong (1,900 mt) and Jiangxi (2,000 mt) had stockpiling volumes of around 2,000 mt; the remaining enterprises with stockpiles were mostly at low levels of 300-500 mt. On the finished product side, the sampled enterprises' combined finished product stockpiles totaled only about 4,350 mt, with most enterprises choosing to spend the holiday with "zero finished product inventory." Two enterprises in Jiangxi explicitly stated that "there are still many pending orders, so there will be no finished product inventory," and an enterprise in Hubei also noted that "there are still many historical orders to be delivered during the National Day holiday." This reflects that in an environment of weak demand, enterprises generally adopt a defensive strategy of producing based on sales and operating with low inventories.
3. Holiday Arrangements: Holidays Generally Extended to Seven Days, Production Halt Scope Exceeds Last Year
Compared with 2024, the 2025 National Day holiday arrangements have been significantly extended: the number of enterprises in the sample taking a full seven-day holiday increased from six last year to nine; a Sichuan enterprise took a five-day holiday; another enterprise in Jiangxi arranged for workers to take rotating rest days of one to two days. Even enterprises maintaining production mostly reported "normal production, just producing a bit less."
It is worth noting that the production halts at some enterprises are not solely due to holiday factors—a Henan enterprise with 120,000 mt of capacity stated that "production has already stopped, and we will decide after National Day," and four enterprises in Anhui (with a combined capacity of 450,000 mt) are all in a state of production halt, reflecting the operational difficulties the industry faces under the dual squeeze of raw materials and capital.
4. Triple Pressures: Policy, Capital, and Orders Jointly Suppress Operating Rates
The survey details reveal that the weak stockpiling this round is the result of three overlapping pressures:
1. The "reverse invoicing" policy constrains raw material procurement. A 50,000 mt enterprise in Jiangxi stated bluntly, "'Reverse invoicing' has restrictions, so we cannot do it on a large scale and can only arrange for workers to take holidays"; a Sichuan enterprise also reported, "The 'reverse policy' has changed, raw material procurement is restricted, and we have had to reduce operating days during the holiday." The invoice compliance bottleneck on the copper scrap raw material side has become the primary factor constraining enterprises' purchase willingness.
2. Capital pressure limits procurement capability. A Guangdong enterprise said, "We are actively stockpiling, but capital pressure is high and procurement volume is limited"; a 200,000 mt enterprise in Jiangxi also noted, "Capital pressure is high, and we may not procure sufficient raw materials before the holiday."
3. Order structure is dominated by existing orders. Multiple operating enterprises rely on historical pending orders to maintain production, are cautious about taking on new orders, and naturally lack motivation for pre-holiday stockpiling.
V. October operating rate outlook: broadly flat MoM, mainly weaker YoY
Looking ahead to October, the operating rates of sampled enterprises are expected to be mainly "flat" MoM (14 enterprises), but 4 enterprises already expect a MoM decline (of which 3 expect a decline of about 5%, and one suspended enterprise in Henan clearly expects a decline).
The YoY divergence is more pronounced: an enterprise in Hubei expects a 20% decline, while multiple enterprises in Jiangxi and Sichuan expect declines of 5%-10%; only Guangdong (up 15%-20%) and an individual enterprise in Jiangxi (up 5%) expect YoY growth. Overall, the pattern of "weakly stable MoM, under pressure YoY" for the industry's October operating rate is essentially established.
VI. Summary: Defensive holiday approach becomes industry consensus
Based on this survey, the secondary copper rod industry did not see the traditional concentrated pre-holiday stockpiling ahead of the National Day holiday. Amid tightening "reverse invoicing" policies, high capital occupation, and weak end-user orders, enterprises' choices are highly consistent: those that can avoid halting production maintain operations with low inventory and produce based on sales; those unable to withstand the pressure simply halt production early and extend holidays. Pre-holiday raw material stockpiling is concentrated among a few capital-sufficient top-tier players, and the trend of accelerated exit of small and medium-sized capacity continues. After the holiday, close attention should be paid to changes in policy implementation standards and the recovery of copper scrap raw material supply, which will determine whether the industry's Q4 operating rate can stabilize and rebound.
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