SHANGHAI, Sept. 24 (SMM) – A recent SMM survey of 21 major domestic copper smelters (total capacity: 5.35 million mt/yr) revealed the following insights:

1) Average Operating Rate Rises to 90.03% in August
The average operating rate during August at domestic copper smelters was 90.03%, up 5.92% MoM, and the highest monthly average this year. Spot copper prices mostly moved above RMB 55,000/mt during August, but rose slightly toward the end of the month. Most copper smelters surveyed chose to increase operating rates to make up for lost production during maintenance since they believed copper consumption would increase as the season low demand period ends in September. As copper prices rose gradually in late August, the price difference between scrap and refined copper grew, propelling scrap copper smelters to halt plans for reducing production. The increase in spot TC/RC for copper concentrate was another factor boosting interest from copper smelters in increasing production during August.

2) Growth in Refined Copper Stocks Slows, Purchasing Interest in Copper Concentrate Improves 
Refined copper stocks at the copper smelters were 67,710 mt last week, up 2,760 mt from the previous survey. Despite increases in absolute amounts of refined copper, the days of stocks (stocks/daily production) did not change noticeably. However, growth in refined copper stocks has now slowed. Copper smelters have become more willing to move goods as copper prices surged noticeably during September, so refined copper stocks at domestic copper smelters are expected to fall in the near term. 

As the price spread between scrap and refined copper grew, losses at copper smelters turned to profits and compelled them to increase scrap copper stocks. As spot TC/RC for copper concentrate rose during August to USD 60/mt (cents 6.0/lb), copper smelters expressed strong buying interest. However, since spot TC/RC for copper concentrate was nearly flat with TC/RC for long-term contracts, SMM sees limited upside room for spot TC/RC.