SHANGHAI, Jan 11 (SMM) – Operating rates across Chinese mills that produce copper rods with copper cathode as feedstock averaged 76.2% in 2018, up 6.72 percentage points from 2017, SMM data showed.
Supply-side reform and deleveraging improved the concentration across the copper rod sector in 2018. Large producers stepped up capacity expansion while many small producers shut. Orders flowed to large copper rod producers, which lifted operating rates. Large and medium-sized firms accounted for the majority of the copper rod producers surveyed by SMM.
Price spreads between copper cathode and copper scrap were narrow in 2018, averaging 1,000 yuan/mt throughout the year. Copper scrap traded in premiums against copper cathode at one point.
This lowered the appeal of copper scrap and eroded production enthusiasm across copper rod producers with copper scrap as feedstock. Orders went to mills that produced copper rods with copper cathode, driving up operating rates.
Demand for copper rods was less robust. The wire and cable sector is the major downstream consumer of copper rod.
Operating rates across wire and cable producers averaged 81.73% in 2018, down 1.27 percentage points from 2017.