Linyi East China Nonferrous Metals City Secondary Copper Throughput Continued to Decline as Market Awaited Implementation of Document No. 783 [SMM Analysis]

According to SMM, from July 22 to July 26, the weekly average price of #1 copper cathode was 74,785 yuan/mt, down 4.68% WoW; the weekly average price of bare bright copper in East China Nonferrous Metals City was 69,180 yuan/mt, down 5.19% WoW; and the weekly average price of bundled coarse wire was 69,380 yuan/mt, down 5.19% MoM.

According to SMM, copper prices experienced a unilateral decline last week. Secondary copper traders in Linyi East China Nonferrous Metals City reported a sharp drop in upstream shipment enthusiasm. With the unclear implementation of the Fair Competition Ordinance, the procurement volume of secondary copper in Linyi East China Nonferrous Metals City significantly decreased. Additionally, most copper rod plants using copper scrap as raw material will shut down by the end of July to observe the subsequent policy implementation, leading to a noticeable decline in their procurement volume. This has led some secondary copper traders in Linyi East China Nonferrous Metals City to bargain down purchase prices. Overall, the outflows from warehouses and inflows into warehouses of secondary copper in Linyi East China Nonferrous Metals City both declined, leading to a significant drop in throughput.

This week, supply side, copper prices continued to run at low levels with a further downward trend, and the shipment enthusiasm of secondary copper traders continued to decline. The procurement volume of secondary copper in Linyi East China Nonferrous Metals City continued to decrease. By the end of July, as most copper rod plants using copper scrap as raw material will shut down, the procurement volume of secondary copper will continue to decline, leading to a reduction in the outflows from warehouses of secondary copper in Linyi East China Nonferrous Metals City. Therefore, it is expected that the throughput of secondary copper in Linyi East China Nonferrous Metals City will continue to decline significantly this week. According to SMM, some traders there have already started trading tax-included secondary copper based on market demand. SMM will continue to pay attention to market dynamics and the progress of the Fair Competition Ordinance.