Pre-holiday Stockpiling Boosts Operating Rate Rebound; High Copper Prices and High Premiums Suppress Future Demand [SMM Copper Cathode Rod Weekly Review]

The operating rate of major copper cathode rod enterprises in China this week (September 18 - September 24) was 69.9%, up 4.08 percentage points WoW, up 1.78 percentage points from expectations, and down 3.88 percentage points YoY. This week, the operating rate continued its rebound trend, with production focused on pre-holiday stockpiling orders. This year, enterprises had more holiday days than last year, and most planned to complete stockpiling before the holiday, driving the operating rate higher. However, high copper prices and high premiums led to strong wait-and-see sentiment downstream, and new orders pulled back notably. By segment, end-use industries such as wire and cable and enamelled wire were boosted by pre-holiday stockpiling, with operating rates rebounding to varying degrees. On the inventory side, affected by the pre-holiday stockpiling cycle, coupled with tight spot supply of copper cathode, enterprises actively replenished raw materials, with raw material inventories up 4.92 percentage points WoW; downstream cargo pick-up slowed, pushing finished product inventories up 3.15 percentage points WoW. Looking ahead to next week (September 25 - October 1), high premiums and high copper prices will continue to suppress downstream purchasing sentiment, with new orders scarce. Coupled with the approaching Mid-Autumn Festival and National Day holidays, enterprises will gradually shut down and cut production. Therefore, SMM expects the operating rate of copper cathode rod enterprises to fall 10.77 percentage points WoW to 59.13% next week.