Operating Rates Of Copper Rods Plants Using Copper Scrap Rose Further

The operating rates of copper rod plants using copper scrap were 48.61% between September 15 and September 21, a rise of 3.96 percentage points from a week ago, according to SMM survey of 15 plants with a capacity of 1.48 million mt/year. One copper rod plant using copper scrap as raw material in the survey sample undertook maintenance previously but in the meantime, it continued to restock copper scrap. Its output increased last week due to outstanding long-term contracts. Excluding the plant, the average operating rate of copper rod plants using copper scrap as raw material declined slightly last week.

On the supply side, copper prices continued to decline last week, falling sharply at the end of the week. Suppliers of copper scrap thus refrained from selling cargoes, reducing the supply of copper scrap rapidly. Copper rod plants using copper scrap as raw material reported hard access to raw materials and their daily purchase volume fell short of the demand from one furnace of output. The raw material inventory at most copper rod plants using copper scrap as raw material fell below the safe level. The supply of copper scrap will still tend to be tight next week and copper rod plants using copper scrap as raw material can hardly restock enough raw materials for production during the Mid-Autumn Festival and National Day holidays.

On the consumption, the disappearing of economic benefits of copper rod produced with copper scrap lowered new orders. However, traders that had signed numerous orders at high prices took deliveries aggressively last week due to high profits, tightening the spot supply of copper rod produced with copper scrap. Meanwhile, raw material shortages also resulted in scarce spot supplies, prompting producers to raise prices. Copper rod produced with copper scrap was offered with premiums over the SHFE front-month copper contract.

According to SMM survey, copper rod plants using copper scrap as raw material normally maintained production during the National Day holidays. However, due to the recent continuous decline in copper prices, it has been difficult for those plants to restock raw materials. Should the supply of copper scrap fail to improve next week, most copper rod plants using copper scrap as raw material will suspend production during the National Day holidays.