Policy Implementation: Gradual Resumption of Secondary Copper Rod Plants in South China [SMM Analysis]

According to SMM survey data, the operating rate of secondary copper rod plants this week was 25.71% (surveyed enterprises: 15, capacity: 1.59 million mt/year), up 9.54 percentage points WoW. This week, the average price spread between refined and scrap rods was 1,055 yuan/mt, down 423 yuan/mt from the pre-holiday average of 1,478 yuan/mt. The average discount against futures contract for secondary copper rod prices in Jiangxi was 477 yuan/mt, up 368 yuan/mt WoW.

According to SMM survey, secondary copper rod plants in Jiangxi have renegotiated business plans with local governments, but the new plans are less favorable than before. It is expected that the invoice tax rate will rise by 0.5% to around 6.2%. Additionally, high-priced copper scrap has dampened the enthusiasm for resumption among most secondary copper rod plants. Some enterprises indicated they would wait 1-2 weeks before considering resumption, and a few have decided to resume after the Chinese New Year. Outside Jiangxi, secondary copper rod plants in Hubei, Hunan, Anhui, Jiangsu, and Sichuan have resumed normal production after the holiday.

Looking ahead to next week, with October copper anode TC at 400-450 yuan/mt, the high prices of copper scrap limit the discount of secondary copper rod prices against the futures market. Many secondary copper rod plants are prioritizing the production of copper anodes. If copper scrap prices continue to stand firm, the recovery of the operating rate for secondary copper rods will slow down.