How did the YoY performance of China's copper cathode rod production fare in July as copper prices continued to decline?

According to SMM data, the total production of copper cathode rod in July was 851,000 mt, up 47,900 mt MoM. The operating rate was 65.14%, up 2.59 percentage points MoM and 1.28 percentage points YoY. In east China, the total production of copper rod was 547,300 mt, with an operating rate of 68.35%, up 1.06 percentage points YoY. In south China, the total production of copper rod was 139,500 mt, with an operating rate of 67.36%, up 1.18 percentage points YoY. (For data on production and operating rates in other regions, please refer to the SMM database.)

In the second half of July, copper prices declined continuously. According to SMM data, the average price of SMM #1 copper cathode in July was 77,379.13 yuan/mt, down 1,977.71 yuan/mt MoM. Meanwhile, the average price difference between primary metal and scrap copper rod in July was 719 yuan/mt, narrowing by 254 yuan/mt MoM. The price difference between primary metal and scrap continued to narrow, leading to a return of orders to copper cathode rod products. Additionally, due to the continuous rise in copper prices in April and May, a large number of downstream orders were backlogged. When copper prices fell below 75,000 yuan/mt for the first time in July, the previously backlogged orders were released, and the operating rate of copper cathode rods rebounded to the level of March this year.
From a YoY perspective, the national operating rate of copper cathode rods in July was 65.14%, up 1.28 percentage points YoY, mainly due to the continuous increase in capacity. In July 2024, the SMM national sample capacity of copper cathode rods was 15.677 million mt, up 257,000 mt YoY from July 2023, while the actual operating rate decreased by 0.09 percentage points YoY.

Copper Prices Fell Below 72,000 Yuan/mt in August but May Struggle to Meet Target Production

In mid-August, copper prices continued to operate below 75,000 yuan/mt, briefly falling below the 72,000 yuan/mt mark. The price spread between copper cathode rod and copper scrap dropped to a minimum of 140 yuan/mt. Consumption of copper cathode rod significantly rebounded at the beginning of the month, especially from the 5th to the 9th. However, as copper prices rose again in mid-August, downstream consumption showed a lack of end-user support, performing more moderately compared to early August but still improving MoM compared to June this year. As of the statistical date, the output of copper cathode rod makers in August is expected to rise to 885,400 mt, with the operating rate continuing to increase by 2.63 percentage points MoM. However, due to the lack of new support for consumption, it may be difficult to achieve the target production in August.