Copper Scrap Rod Plants Keen to Reduce Inventory of Finished Products

The operating rates of copper rod plants using copper scrap were 54.78% between March 4 and March 10, a drop of 3.74 percentage points from a week earlier, according to SMM survey of 15 plants with a capacity of 1.48 million mt/year). The civilian cable market is the main downstream consumer of copper scrap rods. The current release of more favourable policies for real estate will not be transmitted to copper semis industry any time soon. Therefore, new orders generated were extremely limited. Most wire and cable factories still purchased as required. The lack of new orders combined with high finished product inventories prompted copper scrap rod plants to lower inventories and slow down production last week, lowering the average operating rate.

As of Friday, copper rod produced with copper scrap in Jiangxi was quoted with a discount of 730 yuan/mt against SHFE front-month copper contract prices. Electric copper rod in east China was quoted with premiums of 635 yuan/mt over the contract, with the price spread narrowing to 1,365 yuan/mt between copper cathode rod and copper rod produced with copper scrap. This led to lower profit at copper scrap rod traders, constraining their purchases.