SHANGHAI, Aug 19 (SMM) - Operating rates across copper rod (made of concentrate) companies stood at 71.94% in July, exceeding estimates by 3.26 percentage points according to SMM, which indicated an unexpectedly heated market in the traditional off-season.
In terms of weekly performance in July, the operating rates among copper rod (made of concentrate) companies stood at 70.56%, 71.78%, 71.12%, 71.27% respectively in chronological order, with an average operating rate of 71.18%, which increased steadily based on SMM survey.
On the other hand, the downstream power consumption in July appeared to be slightly warmed up, mainly driven by the increasing demand for medium to high voltage engineering cables and civilian wires for home decoration.
Another reason for the significantly increasing demand for copper rod made of concentrate was the greatly narrowed spread between concentrate and scrap on the back of recovering demand. SMM data shows that the monthly average of concentrate - scrap spread in July was 935.81 yuan/mt, down 405 yuan/mt from the previous month. As such, secondary copper rod almost lost its superiority in prices, benefiting sales of copper rod made of concentrate by downstream cable companies.
However, the operating rates in the first week of August retreated greatly due to the spreading COVID-19 pandemic in places like Nanjing and Yangzhou. A good number of middle to small-scale cable and wire companies reduced or suspended production amid transportation disruption, affecting shipment of copper rod made of concentrate.
The operating rates have been picking up in the second week of August due to narrowing spread between concentrate and scrap. But SMM believes that the operating rates will remain influenced due to the COVID-19 pandemic.
Note: SMM copper analysts team started to report copper rod (made of concentrate) market since June, 2021 in terms of downstream consumption, operating rates, etc. to reflect the market status in a timely manner.