Operating Rate of Copper Cathode Rod Rebounds as Expected, Weak Recovery Under the Constraint of Copper Prices [SMM Analysis]

       This week, the SMM survey covered the production and sales of major medium- and large-sized copper rod enterprises in China. The comprehensive operating rate was 62.10%, up 44.36 percentage points WoW, but 0.53 percentage points lower than the expected value. Based on the lunar calendar, the operating rate still declined by 4.1 percentage points YoY.

       The resumption of operations by copper cathode rod enterprises after the holiday drove the operating rate to rebound as expected. Although the destocking cycle continues, copper cathode rod enterprises generally reported that the pace of downstream cargo pick-up has remained slow since the post-holiday resumption. This week saw only a slight recovery compared to last week, still falling short of normal consumption levels. The root cause lies in the surge in copper prices. Copper prices have continued to rise after the holiday, with no improvement in end-use consumption. Downstream enterprises' resumption of operations also fell short of expectations, new orders remained weak, and downstream restocking willingness was relatively low due to the pressure of high copper prices.

       From the inventory perspective, with the post-holiday resumption of operations and the arrival of some imported copper supplies and long-term contracts, the raw material inventory of major domestic copper cathode rod plants increased by 43.41% MoM to 48,400 mt. Meanwhile, the finished product inventory of copper cathode rod plants gradually decreased by 17.12% MoM to 63,400 mt. Looking ahead, the operating rate of copper cathode rod enterprises is expected to continue recovering, excluding the holiday impact, and rise to 73.24% next week (2.14-2.20), though still down 1.1 percentage points YoY.