Operating rates of copper rods plants using copper scrap plummeted on tight copper scrap supply

The operating rates of copper rod plants using copper scrap were 31.67% between October 6 and October 12, a drop of 9.49 percentage points from a week earlier, according to SMM survey of 15 plants with a capacity of 1.48 million mt/year. Operating rates of copper rods plants using copper scrap plunged as copper scrap supply failed to improve.

On the supply side, copper prices after the holidays were at the lowest level in the third quarter, and suppliers of copper scrap refrained from selling their cargoes. The copper rod plants using copper scrap as raw material did not restock enough copper scrap before the holidays, closing longer for the Mid-Autumn Festival and National Day holidays this year than in previous years. According to SMM survey, the current raw material inventory of some copper rod plants using copper scrap as raw material cannot even guarantee continuous production.

On the consumer side, due to the high price of copper scrap, the price of copper rod produced with copper scrap stayed above SHFE copper prices. As of Thursday October 12, the price spread between copper rod produced with copper cathode and with copper scrap recorded 275 yuan/mt. The diminishing economic benefit reduced the impact on copper rod produced with copper cathode. Downstream wire and cable factories purchased aggressively, keeping supply of copper rod produced with copper cathode and with copper scrap tight. The demand for copper rod produced with copper scrap did not drop significantly last week.

Copper prices may return to the upward channel in the coming week. Therefore, the shipments by traders of copper scrap may be boosted, easing the tight supply of copper scrap. Hence the operating rates of copper rod plants using copper scrap as raw material will increase.