Copper Price Fluctuations & Weak End-User Demand Create Dual Pressure: The Dilemma of "Unsuccessful Destocking" for Copper Cathode Rods Awaits Resolution [SMM Analysis]

       This week, the SMM survey covered the production and sales of major medium and large domestic copper rod enterprises. The overall operating rate was 74.25%, up 12.15 percentage points MoM, 1.01 percentage points higher than the expected value, and down slightly by 0.09 percentage points YoY in the third week after the Chinese New Year based on the lunar calendar.

       Excluding the impact of production halts during the Chinese New Year holiday, the weekly operating rate of copper cathode rod enterprises rebounded MoM. However, consumption this week was still significantly constrained by copper price fluctuations and weak end-use consumption. Downstream cargo pick-up showed a noticeable recovery only on Monday and Tuesday when copper prices declined, but new orders were suppressed again as copper prices rose. Meanwhile, the slow recovery of end-use consumption further restrained the cargo pick-up pace of downstream copper cathode rod enterprises, resulting in an unsmooth destocking process for copper cathode rod enterprises.

       In terms of specific inventories, spot prices fell to a discount after delivery. With raw material stockpiling by some large enterprises, raw material inventories at major domestic copper cathode rod plants increased 9.61% MoM to 53,050 mt. Meanwhile, finished product inventories at copper cathode rod plants continued to decrease by 7.26% MoM to 58,800 mt amid gradual destocking. Looking ahead, the current destocking process of copper cathode rod enterprises faces obstacles, with varying levels of finished product inventory buildup pressure and production plans among enterprises. The weekly operating rate of copper cathode rod enterprises is expected to remain relatively stable next week at 74.55%, up 0.30 percentage points MoM and 3.23 percentage points YoY.