[SMM Analysis] affected by many adverse news, copper rod processing fees have dropped significantly all over the country this week.

Published: Jul 03, 2020 17:18 (GMT+8)

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SMM7 March 3: affected by many adverse news, copper rod processing fees have dropped significantly all over the country this week. According to our SMM research, this Friday (July 3) East China 8mm power industry pole processing fee of 600mur730 yuan / ton, the average price is down 95 yuan / ton compared with last Friday; Guangdong 8mm power industry rod processing fee of 560ly680 yuan / ton, the average price is 80 yuan / ton lower than last Friday; North China 8mm power industry rod processing fee of 550 million yuan / ton, the average price is 50 yuan / ton lower than last Friday; The processing fee for poles used by the 8mm power industry in Southwest China was 730mur800 yuan / ton, which was 35 yuan / ton lower than that of last Friday. Generally speaking, the processing fee of copper rod in southwest China is the highest and that in North China is the lowest. The detailed quotation is shown in the following figure:

We think there are several reasons for the general drop in copper rod processing fees this week:

1: the rising water of electrolytic copper has dropped sharply all over the country this week, such as 170 yuan / ton in Pingshui in Shanghai, 370 yuan / ton in Guangdong, 50 yuan / ton in North China and 30 yuan / ton in southwest Pingshui.

2: the impact of low-price scrap copper rod on the market is also another important reason for the rise and fall of electrolytic copper rod. As far as we know, at present, the price of waste copper rod in Guangdong is about-800yuan / ton, and the price difference between the two is as high as 1360 yuan / ton; in North China, the price difference between the two is about-500yuan / ton, and the price difference between the two is also 1150 yuan / ton. At present, many cable factories have switched to scrap copper poles, and the operating rate of electrolytic copper rod enterprises has declined, and they are not willing to raise prices too high in order to ensure market share. The most obvious one is in Guangdong, where the rising water of electrolytic copper has risen to more than 400 yuan / ton some time ago, but the processing fee of electrolytic copper rod is only 720 yuan / ton, which leads to many high-cost copper rod enterprises being forced to stop production.

3: since mid-late June, the operating rate of most cable enterprises has declined. On the one hand, it is affected by the reduction of orders from power grid, real estate and other industries, and on the other hand, it is affected by high copper prices. At present, cable enterprises are not willing to prepare too much raw material inventory, mainly on-demand procurement, take the initiative to reduce the operating rate, and they are more inclined to take advantage of the current high copper prices to digest product inventory.

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