Jul operating rates across copper rod processors beat expectations despite decline

SHANGHAI, Aug 13 (SMM) – Operating rates across Chinese copper rod manufacturers with copper cathode as feedstock averaged 75.09% in July, down 0.56 percentage point from June but better than expected as demand improved by infrastructure and 5G base station projects. 

On a year-over-year basis, rates slid 6.28 percentage points in July, showed an SMM survey on Tuesday August 13. The survey covered 36 domestic producers, with an annualised capacity of 8.46 million mt. 

Last month, downstream purchases in the spot copper rod market were active in a traditional slack season, as negative impact from macroeconomic development kept copper prices at lows. Prices of copper rod made from copper cathode stood as low as 200 yuan/mt in July, weakening any price advantage of scrap-made copper rod.  

SMM learned that copper rod producers in China continued to step up capacity build-out despite overall excessive capacity. 

The ratio of raw materials inventory to monthly output at copper cathode-made rod producers stood at 10.74% in July, up 0.05 percentage point from the previous month, driven by stockpiling on lower prices. Seasonality and cash-flow burden capped the purchases of feedstock.

The average operating rate across refined-copper-made rod producers may continue to slip to 73.01% in August as the slow season grinds on. But some major processors reported stable downstream orders for August.
 
SMM remains optimistic about downstream consumption from wire, cables after October due to the expansion of power grid projects in the fourth quarter.