SMM News on May 9:
According to SMM's data survey, the operating rate of secondary copper rod this week was 21.74%, an increase of 3.45 percentage points WoW, but a decrease of 4.62 percentage points YoY. Meanwhile, the average price difference between copper cathode rod and secondary copper rod this week was 1,268 yuan/mt, up 303 yuan/mt WoW. In addition, the discount of secondary copper rod in Jiangxi against copper futures was 504 yuan/mt, which expanded by 279 yuan/mt WoW.
The operating rate of secondary copper rod enterprises rebounded this week, primarily due to the suboptimal stockpiling of raw materials before the holiday. This led to most enterprises granting workers a 2-3 day leave during the Chinese New Year, with some extending it to 5 days. As enterprises resumed normal production, the rebound in operating rates was a normal phenomenon. However, the sales losses of secondary copper rod continued to widen, forcing some enterprises to reduce production or limit order intake. Amid high raw material prices and tight supply, the price discount of secondary copper rod expanded. This was mainly due to the onset of the off-season in consumption, prompting secondary copper rod enterprises to lower selling prices to control inventories. This week, the finished product inventories of sample secondary copper rod enterprises stood at 1,600 mt, a decrease of 370 mt WoW. Some enterprises reported that, in the medium and long-term, the economic benefits of secondary copper rod are lower than those of copper anode. After resuming work post-holiday, some enterprises decided to suspend secondary copper rod production and switch to producing copper anode.
Due to the sustained high prices of raw materials, secondary copper rod enterprises are facing operational difficulties. It is expected that the operating rate of secondary copper rod will drop back slightly to 20.68% next week.
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