Stockpiling Nearly Halted, "Forced Holidays" Amid Bill and Capital Pressures [SMM Secondary Copper Rod Weekly Review]

SMM, September 30:

      According to SMM data, the operating rate of secondary copper rod producers stood at 9.35% this week, down 2.64 percentage points WoW and down 9.21 percentage points YoY. Meanwhile, the average price difference between copper cathode rod and secondary copper rod was 1,933 yuan/mt, down 181 yuan/mt MoM. In addition, the average discount of secondary copper rod in Jiangxi against copper futures was 443 yuan/mt, down 157 yuan/mt MoM. Based on SMM's secondary copper rod sales gross profit model, the average gross profit for the week was 1,001 yuan/mt, up 90 yuan/mt MoM.

       In the final trading days before the National Day holiday, the price difference between copper cathode rod and secondary copper rod held at 1,850-1,930 yuan/mt, a level that appeared economically viable, but the real situation for secondary copper rod enterprises was "spreads exist, raw materials do not, holidays come first." Daily market performance further confirmed the failure of stockpiling. After the Mid-Autumn Festival holiday ended, many secondary copper rod enterprises were still seeking copper scrap supply from various sources, but traders had limited arrivals during the holiday and limited sellable inventory before National Day. With insufficient raw material stockpiles, enterprises could only arrange for workers to take a 3-day holiday, and explicitly stated that "if raw material purchases remain insufficient in the remaining two trading days, worker holidays will be extended." On September 29, copper prices climbed in the afternoon, further dampening pre-holiday stockpiling sentiment. More awkwardly, end-user wire and cable enterprises, facing high copper prices, required secondary copper rod enterprises to deliver during the National Day holiday when placing orders, while rod enterprises, due to insufficient raw materials, preferred to negotiate post-holiday delivery. Upstream and downstream demands were misaligned, and daily transactions in the copper scrap market were mediocre. Comparing the entire copper processing industry, this year's National Day presented a pattern of "divergence in the primary segment, collapse in the secondary segment"—copper cathode rod producers took an average holiday of 4.4 days (up 0.35 days YoY).

       Overall, the secondary copper rod industry did not see the traditional concentrated stockpiling before the holiday. Under the multiple pressures of tightened "reverse invoicing" policies, high capital occupation, weak end-user orders, and high copper prices, enterprises made highly consistent choices: those that could avoid shutdowns maintained operations with low inventory and produce based on sales, while those unable to withstand the pressure simply shut down early and extended holidays. Pre-holiday raw material stockpiling concentrated among a few well-capitalized top-tier players, and the trend of accelerated exit of small and medium-sized capacity continued.

As the world's largest copper consumer, China's industry chain faces three major challenges: rising external dependence for upstream resources, overcapacity in midstream processing, and downstream demand suppressed by high copper prices. To help the industry navigate the changing landscape, SMM, together with copper industry chain enterprises, has jointly compiled the bilingual (Chinese-English) "2026 China Copper Industry Chain Distribution Map." Click this link to receive a free copy of the copper industry chain distribution map: . SMM Joint Production Contact: Liu Mingkang 156 5309 0867