Operating rates of copper rod plants using copper cathode continued to decline in May

According to SMM survey data, the operating rate of copper rod makers using copper cathode in May was 62.84%, with a MoM decline of 6.12 percentage points and a significant YoY decline of 12.56 percentage points. The operating rate of large enterprises was 71.93%, medium-sized enterprises 46.55%, and small enterprises 51.64%. (Surveyed enterprises: 52, capacity: 13.06 million mt)

Copper prices hit a new record high in May. SMM data showed that the average price of SMM #1 copper cathode in May increased by 5,472.5 yuan/mt compared to April. The continuous rise in copper prices suppressed the processing fees for copper rod made of copper cathode. The average processing fee for rods used in the power industry (including spot premiums and discounts) in east China was 296.25 yuan/mt in May, down 100.25 yuan/mt from April. Meanwhile, the processing fee excluding spot premiums and discounts also decreased. In this scenario, downstream enterprises slowed down their order pick-up pace due to financial pressure, leading to long-term order defaults and weak spot demand in May. The operating rate was 4.19 percentage points lower than the expected operating rate. Additionally, the average price difference between copper rod made from copper scrap in Jiangxi and rods used in the power industry in east China was 2,219 yuan/mt in May, and the substitution effect of copper rod made from copper scrap for copper rod made of copper cathode remained strong.