According to SMM survey, the operating rates of copper rod makers using copper scrap averaged 44.84% in May, down 8.06 percentage points MoM and 7.56 percentage points YoY. (Notes: SMM surveyed 43 producers with a combined capacity of 3.83 million mt/year.) As copper prices went down at the beginning of May, suppliers of copper scrap were reluctant to sell their cargoes, lowering copper scrap supply rapidly. The price spread between copper cathode and copper scrap thus shrank to a low of 561 yuan/mt. Raw material shortages forced copper rod plants using copper scrap to shut down.
When prices fall sharply, there are regional differences in the supply of copper scrap. Since copper scrap in Zhejiang and Guangdong are mostly imported copper scrap, most suppliers will use hedging for risk control. Therefore, when copper prices run at a low level, the supply of copper scrap in Guangdong and Zhejiang is slightly looser than other regions. At the end of the month, copper prices stopped falling and rebounded. Suppliers of copper scrap sold some copper scrap. Some copper rod plants resumed production on eased raw material tightness.
Consumption of copper rods produced with copper scrap in May weakened compared with April against the lack of consumption improvement and economic benefits.
