The operating rates of copper rod plants using copper scrap were 40.20% between July 22-28, a drop of 2.93 percentage points from a week earlier, according to SMM survey of 15 plants with a capacity of 1.48 million mt/year).
Poor profits for suppliers tightened the supply of copper scrap, reducing the access to copper scrap for copper rod plants. According to SMM survey, raw material inventories at most of the copper rod factories using copper scrap were below the safe levels. Some of the plants eked out continuous production. Downstream consumption did not improve significantly as wire and cable factories lacked purchasing interest. However, traders had arbitrage opportunities due to high copper prices were actively purchasing. This, combined with lower operating rates, tightened spot supply of copper rod produced with copper scrap.
As of last Friday, copper rod produced with copper scrap in Jiangxi was quoted at 68,600 yuan/mt on average, with a discount of 370 yuan/mt against SHFE front-month copper contract prices. Electric copper rod in east China was quoted with premiums of 670 yuan/mt over the contract, with a price spread of 1,040 yuan/mt between copper cathode rod and copper rod produced with copper scrap. Due to the high absolute price of copper rod produced with copper scrap, trades were lukewarm last week.
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