SHANGHAI, Nov. 3 (SMM) –Demand outstrips supply on the copper rod market since now is the traditional high demand period. According to SMM sources, copper rod producers are taking the opportunity to appropriately raise the processing fees and have a favorable position in choosing their downstream enterprises.
The latest SMM survey results revealed operating rates at electric wire and cable producers were high in September and October, indicating higher demand for copper rod, which is thus in shortage of supply. Moreover, the inverted price relationship between scrap and refined copper has led a drop in output of low-oxygen copper rod using scrap copper as raw materials, and this especially increased the chance for copper rod producers using refined copper as raw materials to raise processing fees.
In addition, as copper rod processing fees are generally between RMB 800-1,200/mt, much lower than refined copper prices, low profit margins and capital pressures have been disturbing copper rod producers. Combined with the pressure of the year-long tightening monetary measures, copper rod producers opt to raise processing fees in a proper manner and cooperate with targeted customers, in order to avoid breach of contracts and ensure capitals.