Downstream consumption still weak despite wider price spread between copper rod produced with copper cathode and with copper scrap

The operating rates of copper rod plants using copper scrap were 38.19% between October 30 and November 2, a drop of 0.24 percentage point from a week earlier, according to SMM survey of 15 plants with a capacity of 1.48 million mt/year. As of Thursday, copper rod produced with copper scrap in Jiangxi was quoted at 67,450 yuan/mt on average, with a discount of 160 yuan/mt against SHFE front-month copper contract prices. Electric copper rod in east China was quoted with premiums of 740 yuan/mt over the contract, with a price spread of 900 yuan/mt between copper cathode rod and copper rod produced with copper scrap. SMM understood that several copper rod plants using copper scrap as raw material have basically completed their annual output targets, and last week they mainly completed orders from fixed customers. Some plants in the north were forced to reduce production due to environmental inspections.

On the supply side, suppliers of copper scrap still suffered small losses, thus there was limited room for negotiation on the price of copper scrap last week. Copper rod plants using copper scrap as raw material said that the purchase price of copper scrap last week was high and they purchased on demand. The inventory of copper scrap was sufficient to 2-3 days of continuous production.

The mainstream quotes of copper rods produced with copper scrap in Jiangxi last week were 67,300-67,600 yuan/mt, with traded prices of 67,100-67,200 yuan/mt. The price spread between copper rod produced with copper cathode and with copper scrap stood at 900 yuan/mt, lower than 1,100 yuan/mt which is considerable advantageous for users of copper rod produced with copper scrap. Downstream wire and cable factories lacked purchasing interest. this week, operating rates of copper rod plants using copper scrap as raw material look set to fall back.