Copper Cathode Rod Production Decreased as Expected in October, Why is Year-End Production Expected to Rebound? [SMM Analysis]

According to SMM data, the total production of copper cathode rods nationwide in October was 856,900 mt, down 85,800 mt MoM, with an operating rate of 64.36%, down 6.44 percentage points MoM and 4.81 percentage points YoY. In east China, the total production of copper rods was 570,000 mt, with an operating rate of 71.19%, down 0.52 percentage points YoY; in south China, the total production of copper rods was 130,900 mt, with an operating rate of 63.21%, down 3.72 percentage points YoY. (For production and operating rate data in other regions, please refer to the SMM database)

October coincided with the National Day holiday, during which downstream deliveries were lower-than-expected and overall consumption was weak. After the holiday, copper prices declined, but throughout October, the SMM #1 copper cathode price remained above 75,000 yuan/mt. According to SMM data, the average price of SMM #1 copper cathode in October was 76,963.06 yuan/mt, up 2,267.53 yuan/mt MoM. However, the price spread between copper cathode rods and secondary copper rods narrowed by 104 yuan/mt MoM due to high raw material prices for copper scrap. Despite stable copper prices and a narrowing price spread between copper cathode rods and secondary copper rods, the absolute price remained high, leading to weak end-use consumption support. Additionally, many companies had holiday shutdowns during the National Day period, resulting in a significant MoM decrease in copper cathode rod production and a YoY decline in the operating rate during the peak season.

Entering November, excluding the impact of the National Day holiday, copper cathode rod producers maintained normal production. Downstream companies, based on just-in-time procurement, had plans to push for annual targets at year-end, and some had low-price orders that needed to be completed before year-end, providing support for November orders. Furthermore, the continuous decline in copper prices in mid-November led to a significant increase in downstream consumption. Therefore, looking ahead, the nationwide production of copper cathode rods in November is expected to increase to 871,100 mt, with the operating rate rising to 65.42% MoM.