SHANGHAI, Aug 24 (SMM) – The operating rate across China's copper rod producers that use scrap as raw materials fell further in July to 38.78%, an SMM survey found. This fell by 27.55 percentage points from a year ago.
Medium-sized producers with annual capacity of 50,000-100,000 mt registered an operating rate of 40% last month. This compared with a rate of 38.18% for large producers with annual capacity above 100,000 mt. Two large plants undertook maintenance in July, given supplies of copper scrap, and this dragged down rates.
Many scrap-using copper rod producers suspended last month as scrap supplies tightened and demand moved to copper rods made from refined materials. As falling copper prices narrowed profit margins, scrap-using producers withheld from selling.
In August, a medium-sized scrap-using copper rod producer suspended its production line without plans to resume in the short run as scrap supplies continued to be tight. Another plant closed permanently due to losses. Refined copper consumption was bolstered as a result.
SMM expect large scrap-using copper rod producers to operate at a higher rate in August, up 3.55 percentage points from July, as two mills resumed production. However, the operating rate of medium-sized producers is likely to dip 3.75 percentage points this month. This will lower the overall operating rate by 0.24 percentage point from July to 38.54% in August.
SMM's survey covered the provinces of Henan, Jiangxi, Guangdong, Hebei, Hunan, and Jiangsu where the majority of China's copper rod plants are located.