SMM, February 28:
According to SMM survey data, the operating rate of secondary copper rod enterprises this week was 33.67%, up 2.92 percentage points WoW but down 9.51 percentage points YoY. The average price spread of copper cathode rod and secondary copper rod this week was 869 yuan/mt, down 52 yuan/mt MoM. In addition, the average discount of secondary copper rod in Jiangxi against copper futures was 443 yuan/mt, narrowing by 137 yuan/mt MoM.
The slight rebound in the operating rate this week was mainly attributed to the gradual implementation of the "reverse invoicing" policy in Anhui. Local enterprises have gradually adapted to this new measure in raw material procurement, and production has returned to normal. Moreover, the narrowing price spread between copper cathode rod and secondary copper rod, as well as the reduced discount of secondary copper rod in Jiangxi, led end-use wire and cable enterprises to prefer purchasing copper cathode rod. This resulted in an increase in finished product inventories of secondary copper rod across various regions. This week, the finished product inventories of secondary copper rod enterprises reached 5,150 mt, up by 2,050 mt WoW. Due to weak end-use demand and slow cargo pick-up by traders, inventory accumulation has become increasingly evident. Although next week marks the beginning of the traditional March consumption peak season, secondary copper rod enterprises generally expect sales to remain flat YoY, which is already considered an optimistic outlook.
Looking ahead to next week, the full resumption of normal production in Anhui is expected to further boost the operating rate of secondary copper rod enterprises, which is projected to reach 37.78%.
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