SHANGHAI, Mar 14 (SMM) - Last weekend, pandemic outbreak occurred in China again. Pandemic prevention and control has been implemented in Shenzhen, Dongguan and Changzhou. The pandemic control weakens the copper consumption, which has obviously improved recently.
Guangdong, China: The outbreaks of pandemic in Shenzhen and Dongguan are serious. Shenzhen implemented a full-scale pandemic control on March 13. The pandemic control will be carried out in the industrial park for a whole week, and the delivery and procurement are stopped. On the first day, local copper processing materials companies will suspend production for a week, which will cause great damage to the downstream consumption of copper. Dongguan, at present, only some regional pandemic controls are implemented. In the early stage, the production was normal, and employees were required to carry 24-hour negative nucleic acid results for working. However, in the later period, with the continuous impact of raw material procurement and finished product delivery logistics, companies with greater financial pressure will face the shutdown crisis. In other parts of Guangdong, vehicles from other regions were ordered to hold 48-hour negative nucleic acid results, and some factories asked the workers to carry 24-hour negative nucleic acid results to work. As a result, the logistics efficiency is greatly affected.
Shangdong, China: The pandemic prevention and control in Dongying, Shandong, urges vehicles from other regions to apply for special passes and hold negative nucleic acid results within 24 hours. Therefore, the purchase of goods on the same day is delayed until the next day, and the efficiency of downstream delivery is significantly lowered. Moreover, the pandemic in Qingdao resulted in the obstruction of procurement and delivery of local copper processing materials companies. Some companies indicated that they would reduce production by about 15% in March because of the increased pressure of finished products inventory and the weakening end consumption caused by the shutdown of construction.
Jiangsu, China: Changzhou, Suzhou, Wuxi and other places are suffering from pandemic of different degrees. Logistics is greatly impacted, including the delivery and procurement. If the pandemic continues, finished goods piled up in inventory will lead to the crisis of stopping production for companies with great financial pressure.
Hebei, China: Cangzhou, Baoding and other areas are under pandemic control. The local secondary copper rod companies stopped production. During this period, the logistics efficiency is low. Besides, the companies that had been affected by Caishui No.40 kept low inventory and temporarily suspended production.
As of Monday March 14, SMM copper inventory across major Chinese markets decreased 9,100 mt from last Friday to 206,900 mt. The destocking rate slows down slightly. Two reasons contribute to the slow rate of destocking. Firstly, the overall supply in China is reduced, which is caused by the limited shipments from smelters due to COVID-19 and the continuous exports of smelters. Secondly, the cost efficiency of secondary copper rods declines, owing to the warming consumption and the narrower spread between copper cathode rod and secondary copper rod. Looking forward to this week, the supply has not been improved obviously, while the consumption is weakened by the pandemic, thus the destocking rate will slow down this week. Spot premiums were hindered from rising because of the low logistics efficiency and the weakening of end consumption under the influence of pandemic control. The overall market trading will remain weak in the near future.
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