Secondary Copper Rod Enterprises' 2025 Chinese New Year Break Arrangements [SMM Analysis]

SMM, January 17:

With the Chinese New Year holiday approaching, SMM has communicated with secondary copper rod enterprises across various regions to summarize their holiday arrangements and resumption schedules as follows:

• Holiday Arrangements

       According to SMM's compiled data, most secondary copper rod enterprises will shut down furnaces for maintenance after Xiaonian (January 22 or 23), with workers starting their holidays, while administrative staff will begin their holidays no later than January 25. The holiday schedule is generally consistent with previous years, with resumption dates mainly on the eighth day of the lunar new year (February 5) and the sixteenth day (February 13). The holiday duration is approximately 10-20 days.

• Pre-Holiday and Post-Holiday Order Status

       Since January 7, copper prices have risen above 76,000 yuan/mt, driven by US macroeconomic news and a continuous decline in domestic copper social inventories. The price difference between primary metal and scrap has rapidly expanded to over 2,000 yuan/mt, increasing arbitrage opportunities in the futures market and boosting suppliers' sentiment for picking up goods. The price spread between primary and secondary copper rods has gradually widened, attracting wire and cable enterprises to procure secondary copper rods for pre-holiday stockpiling. Orders for secondary copper rods have increased significantly, with some enterprises reporting nearly 1,000 mt of secondary copper rods still to be delivered before the holiday. However, due to the continued weakness in the real estate and construction sectors, many secondary copper rod enterprises hold a pessimistic outlook for post-holiday orders. To exclude the impact of the Chinese New Year break, the average operating rate for January and February 2024 was 35.48%, while the average operating rate for January and February 2025 is expected to be 30.71%. The policy implementation adjustment period and weak consumption have significantly suppressed the operating rate of secondary copper rods.

• Raw Material and Finished Product Stockpiling

       Due to concerns about the varying impacts of "reverse invoicing" implementation on secondary copper raw material prices, most secondary copper rod enterprises have indicated that they will not reserve secondary copper raw material inventories. Instead, they aim to process all raw materials into finished products before the holiday. Given the pessimistic outlook for the end-use consumption sector, most secondary copper rod enterprises have no plans for finished product stockpiling this year. After fulfilling shipment orders, secondary copper rod enterprises are expected to have approximately 300-500 mt of finished product inventories during the holiday, a significant reduction compared to previous years. Only a few enterprises, optimistic about post-holiday copper prices, have stockpiled around 1,000 mt for post-holiday sales.

• Market Outlook

       Secondary copper rod enterprises generally hold a pessimistic outlook for the 2025 market. The adjustment period following policy implementation has not yet ended, and procurement models for secondary copper raw materials have not been aligned with suppliers. Additionally, inconsistent enforcement of policies across regions has made it difficult for enterprises to secure raw material procurement volumes. On the other hand, the slow recovery of the real estate and construction sectors has weakened demand, increasing sales pressure on secondary copper rod enterprises. Considering the tight supply of copper ore in the smelting industry, some secondary copper rod enterprises may shift their production focus to anode plates. End-user clients, such as wire and cable enterprises, may turn to smelters. However, the short-term increase in anode plate supply could significantly impact sales profits.

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