According to SMM survey data, the operating rate of secondary copper rod enterprises in November was 36.3%, up 7.53 percentage points MoM, but down 13.3 percentage points YoY. Among them, large enterprises had an operating rate of 21.17%, medium-sized enterprises at 43.25%, and small enterprises at 65.14% (Surveyed enterprises: 49, with a capacity of 5.32 million mt/year).
The operating rate of secondary copper rod plants in November was recorded at 36.3%, higher than the forecasted 30.33%. Following Trump's victory in the US presidential election in November, copper prices plummeted from 78,100 yuan/mt to 73,000 yuan/mt, initiating nearly half a month of fluctuating market conditions, with copper prices hovering around 73,500-74,500 yuan/mt. Secondary copper raw material suppliers held back cargoes, causing the price difference between copper cathode and copper scrap to narrow to within 600 yuan/mt at times, with very little secondary copper raw material circulating in the market. Secondary copper rod plants reported that due to insufficient raw material procurement and unstable arrivals, they could not guarantee daily normal operations. Under the firm prices of secondary copper raw materials, SMM calculated that the gross profit of secondary copper rods dropped from an average of 233 yuan/mt in October to an average of -5 yuan/mt in November, forcing plants to endure losses due to high raw material prices just to maintain normal operations. The average price difference between copper cathode rod and secondary copper rod in November was 763 yuan/mt, a decrease of 77 yuan/mt from October. Apart from essential production, end-user wire and cable enterprises only opted to purchase copper cathode rods, even after the center of copper prices moved above 74,000 yuan/mt in mid-November, only slightly increasing their inventory of copper cathode rods and waiting for copper prices to drop before purchasing secondary copper rods. Additionally, in November, the selling price of copper anode was nearly 300 yuan/mt lower than that of secondary copper rods, leading some secondary copper rod enterprises to reduce copper anode capacity and resume production of secondary copper rods, which slightly increased the operating rate of secondary copper rods in November. Currently, enterprises still producing secondary copper rods mainly do so to serve long-established customers and to possibly meet local government's annual production targets, with many expecting to temporarily stop accepting new orders after New Year's Day, starting the Chinese New Year holiday earlier once existing orders are fulfilled.
Inventory of raw materials for secondary copper rod enterprises in November was 14,000 mt
The significant drop in copper prices in November led secondary copper raw material suppliers to hold back cargoes, and additionally, the efficiency of scrap dismantling plants in the north was reduced due to cold winter weather, causing a decline in the supply of secondary copper raw materials. Furthermore, starting from mid to late November, congestion at Westport in Malaysia and import traders ceasing to purchase US secondary copper raw materials led to a noticeable reduction in arrivals of secondary copper raw materials, with many import traders in Zhenhai, Ningbo stating that there was almost no secondary copper raw material in various cargo yards, expecting even less import supply in December. The inventory of raw materials at secondary copper rod plants in November was 14,000 mt, down 1,800 mt MoM from 15,800 mt in October. In December, stimulated by favourable macro front, the center of copper prices is expected to steadily rise, potentially boosting the sentiment of secondary copper raw material suppliers to ship goods, and the supply of secondary copper raw materials in the market is expected to see marginal improvement.
The operating rate of secondary copper rod plants is forecast to be 38.97% in December 2024
According to SMM forecast data, the operating rate of secondary copper rod plants in December 2024 is expected to be 38.97%, up 2.67 percentage points MoM, but down 10.25 percentage points YoY. After resuming production at the beginning of December, enterprises in Yingtan and Guixi, Jiangxi, stated they would maintain normal production until the Chinese New Year holiday. However, a secondary copper rod plant in Anhui, affected by restrictions on bill quotas, had to reduce or even stop production, thus limiting the rise in the operating rate of secondary copper rods in December.
