SMM, January 10:
In December, the operating rate of secondary copper rod plants was 36.34%, lower than the expected 38.97%. Copper prices rose initially and then fell during the month, pulling back from 75,800 yuan/mt to 73,800 yuan/mt. Near year-end, secondary copper raw material suppliers actively sold during the price increase phase, improving raw material procurement for secondary copper rod plants. However, during the price decline, suppliers reduced inventory in advance, leading to a decrease in raw material supply. As a result, secondary copper rod plants faced losses when procuring at market prices. The average price spread between refined and scrap copper rods in December was 806 yuan/mt, up 37 yuan/mt MoM. However, SMM data showed that the gross profit margin for secondary copper rod plants was -66 yuan/mt, with losses expanding by 62 yuan/mt MoM, which dampened production enthusiasm.
In mid-to-late December, market rumors suggested that "reverse invoicing" would be implemented starting January 1, 2025, potentially increasing procurement costs for secondary copper rod plants. Some enterprises planned to temporarily halt production in early January to observe the market. Consequently, secondary copper rod plants accelerated procurement and production in late December to prepare for sales in early January. Secondary copper raw material suppliers, concerned about potential price declines after the New Year, accelerated inventory sales on December 25 and 26. Enterprises with good credit and sufficient funds stockpiled large quantities of raw materials, while others faced procurement difficulties and policy uncertainties, opting to halt production early. Ultimately, the operating rate of secondary copper rod enterprises in December remained flat compared to November.
December Secondary Copper Rod Enterprises' Raw Material Inventory Reached 16,300 mt
In December, the inventory of secondary copper rod enterprises increased, mainly influenced by policy expectations. On one hand, secondary copper rod plants increased production and stockpiling demand. On the other hand, secondary copper raw material suppliers, worried about potential losses from price declines and aiming to recover funds before year-end, actively reduced inventory levels. The raw material inventory of secondary copper rod plants in December reached 16,300 mt, up from 14,000 mt in November, an increase of 2,300 mt. Although the supply of secondary copper raw materials increased in December, enterprises had not received detailed policy implementation notices after the New Year. Concerns about the potential impact of policies on procurement costs persisted, prompting enterprises to attempt price negotiations with upstream suppliers, causing market price fluctuations. The market is expected to take time to digest the policy's impact.
The Operating Rate of Secondary Copper Rod Plants Is Expected to Be 23.53% in January 2025
According to SMM data, the operating rate of secondary copper rod plants in December 2024 is expected to be 23.53%, down 12.81 percentage points MoM and 25.3 percentage points YoY. Secondary copper rod manufacturers indicated that due to significant price fluctuations in the secondary copper raw material market in early January and the expectation of early holidays for downstream wire and cable enterprises, they might opt for early holidays in the second week of January if new orders are insufficient. Additionally, secondary copper raw material suppliers noted that social inventory of secondary copper raw materials continued to decline, and some enterprises might choose early holidays due to difficulties in procuring sufficient raw materials.
