Driven by wild swings in copper prices, the copper scrap market this week operated under their dominance; the sharp fluctuations in futures and spot prices profoundly affected the mentality and behavior of all links in the industry chain, and the market exhibited typical “price-driven, tug-of-war between sellers and buyers, and pulse-like transactions” characteristics. On the production side, SMM data showed the operating rate of secondary copper rod was 15.33% this week, up 4.44 percentage points WoW, indicating some recovery in production activity, but still down 16.75 percentage points YoY, signaling that capacity has yet to fully recover. The average price spread between copper cathode rod and secondary copper rod was 1,372 yuan/mt, widening slightly WoW, and the average discount of secondary copper rod in Jiangxi against copper futures also widened modestly. According to SMM model calculations, the weekly average gross profit per mt increased by 260 yuan/mt to 1,257 yuan/mt, improving the industry's profitability.
However, this improvement was built on an extremely unstable market foundation. Throughout the week, copper prices fell first, then rebounded, and then retreated sharply, swinging wildly. The net result was a slight gain of 250 yuan/mt, but behind it were daily moves exceeding 1,000 yuan/mt. Such volatility directly caused highly unstable behavior on the supply side: when copper prices rose, suppliers' selling sentiment surged and they were keen to sell at highs; once prices fell, they quickly shifted to holding back from selling and waiting on the sidelines, causing market liquidity to contract sharply. The untaxed bare bright copper price in Guangdong rose by 350 yuan/mt over the week, but its trend was not synchronized with that of copper cathode, reflecting the lag in raw material adjustments.
The demand side's performance was more strategic. When copper prices rose, some downstream secondary copper rod enterprises actively purchased based on bullish expectations, even showing a “not afraid of high prices” mentality at the early stage of the price increase. When prices retreated after a rapid rise, they shifted to dip-buying, attempting to lock in costs. This strategy of combining “rush to buy amid continuous price rise” and “dip-buying” ensured that demand existed at different stages of price fluctuations, but the procurement pace was seriously mismatched with the pace of supply release. When suppliers actively sold due to rising prices, buyers might have already consumed some purchasing power during the chase or turned cautious; when suppliers held back from selling due to falling prices, buyers were eager to restock at low prices but had “nothing to buy.” This mismatch caused actual transactions to show distinct pulse-like characteristics, making it difficult to form stable and continuous volume.
The market's volatility and instability could also be glimpsed through key spread indicators. The price spread between primary metal and scrap (between copper cathode and copper scrap) widened from 2,232 yuan/mt at the start of the week to as much as 3,503 yuan/mt at one point, before retreating sharply again. The price spread between copper cathode rod and secondary copper rod also experienced similar wild swings. This not only reflected lagging raw material price adjustments but also highlighted the fragility of secondary copper rod's economic substitution advantage in a rapidly changing market. Overall, the market was entirely driven by copper price movements this week, as sellers and buyers engaged in intense psychological and strategic games amid price changes. Sellers adjusted their shipment strategies based on real-time prices, displaying a strong tendency to “chase the rally and sell into the decline”; buyers decided when to purchase based on price assessments and inventory levels. The rapid shifts in sentiment prevented the market from forming stable expectations, and the availability of circulating supplies became a key variable for daily trading activity. Looking ahead to next week, the market direction will remain closely anchored to copper prices. If copper prices can end their wild swings and provide a relatively clear direction, it will help stabilize the mindsets of sellers and buyers and boost trading volume; if copper prices continue the current pattern of fluctuating at highs, the market is expected to remain gripped by a standoff between a supply strategy of “shipments when prices rise and holding back when prices fall” and a demand strategy of “buying the dip and cautious chasing at highs.” Overall trading activity will continue to swing wildly with price fluctuations, making it difficult for the market to escape the current predicament of standoffs.
