Operating Rates at Copper Processing Plants in Guangdong Hit a Low as Premiums Skyrocketed Amid Low Copper Inventory

SHANGHAI, Nov 23 (SMM) -  The copper cathode inventory in Guangdong has fallen below the 10,000 mt mark, and stand at only 6,527 mt, the lowest since 2018, according to our SMM statistics. In this scenario, the spot premiums in Guangdong hit the highest level in recent years on November 22. The standard-quality copper was quoted with premiums of 1,000 yuan/mt, and the high-quality copper was quoted with premiums of 1,100 yuan/mt.

The reason for the high premium is not only the low inventory, but also the impact of the rising premium in Shanghai. According to our statistics, the average premium of copper cathode in Shanghai was as high as 2,200 yuan/mt last Friday, and has dropped sharply to 1,125 yuan/mt on November 22. The premiums in Guangdong opened high but moved lower yesterday.

The operating rates of many downstream copper processing plants have dropped significantly amid high premiums, especially the copper cathode rod plants. As far as SMM understood, six copper cathode rod plants in Guangdong have halted production currently. When they will resume production will depend on when the copper premiums fall. According to our latest weekly operating rate survey, as of last Friday, the operating rate of copper cathode rod plants in Guangdong was 65.8%, a decrease of 3.2 percentage points from a week earlier and a decrease of 12.2 percentage points from the same period last year.

We expect the operating rate to fall further this week. Only a few large plants with long-term contracts will maintain relatively normal production, and other companies will continue to suspend production or maintain low operating rates.