SHANGHAI, Aug 11 (SMM) - Operating rates of copper rod producers with secondary copper stood at 59.53% in July, down 7.59 percentage points month on month and 9.88 percentage points year on year.
Many places in Henan started power curtailment in mid-July, and floods happened in late July. Some furnaces of secondary copper rod in Xinxiang were soaked and needed to be rebuilt or repaired, which may take more than a month. The production was seriously affected. Meanwhile, secondary copper supply was very tight during a long time in July, and some plants had to reduce or suspend production for lack of raw materials.
Enterprises in Hebei was seriously impacted as they were not under preferential tax policies and lacked price competitiveness for secondary copper. According to a small processing plant, the output in July was less than 2/3 of its production capacity.
The secondary copper rod industry suffered a severe setback in July.
Operating rates of copper rod produced with secondary copper are expected to stand at 57.39% in August, down 2.15 percentage points month on month and 10.9 percentage points year on year.
Traders actively sold goods for high copper prices in early August, so the secondary copper supply was sufficient, and many secondary copper rod producers purchased raw materials. Then copper prices fell back, and traders held back cargoes and mainly delivered goods for previous orders, leading to a tight supply again.
Processing plants that have purchased secondary copper can still maintain production for some time. However, the secondary copper supply is hard to improve, and the processing plants will be in short of raw materials. The plants will have to reduce or suspend production, and the operating rates are expected to further decline in August.
According to SMM survey, the price difference between copper cathode and scrap was narrow, and some companies added a little copper cathode into the cliff for production.