Downstream Demand Recovered Slowly, Lowering Operating Rates of Medium-Sized Copper Rod Plants Using Copper Scrap

SHANGHAI, Apr 21 (SMM) – According to SMM survey, the operating rates of secondary copper rod makers averaged 58.75% in March, up 4.89 percentage points MoM and 6.65 percentage points YoY. (Notes: SMM surveyed 43 producers with a combined capacity of 3.83 million mt/year.) The recovery of the monthly operating rate is due to the sharp drop in copper prices in mid-March, heating the enthusiasm of downstream wire and cable factories for restocking. In addition, the overall supply of copper scrap was ample in March, making it easier to purchase.

The raw material inventory/output ratio at secondary copper rod plants stood at 10.31% in March, down 3.62 percentage point MoM. The output of copper rod produced with copper scrap increased in March compared with that in February. Moreover, due to the slow recovery of real estate demand, downstream wire and cable factories were slow to take deliveries. Hence the finished product inventories at copper rod plants using copper scrap accumulated, leading to cash flow issues. This also slowed their procurement of copper scrap. Limited new orders from small and medium-sized wire and cable factories caused the operating rates of medium-sized copper rod factories using copper scrap as raw material to fall.

The average operating rate of large-scale copper rod factories using copper scrap as raw material (capacity ≥ 100,000 mt/year) in March was 57.76%, an increase of 7.76 percentage points from February, thanks to the traditional peak season and numerous new orders.

The average operating rate of medium-sized plants (50,000 mt/year ≤ capacity <100,000 mt/year) recorded 60.28% in March, a decrease of 5.87 percentage points from 66.15% in February. New orders from small and medium-sized wire and cable factories, the main downstream buyers of copper rod produced with copper scrap, were limited against slow recovery in real estate demand. It is learned that the average operating rate of small and medium-sized wire and cable factories was about 60%.