Copper Scrap Becomes Increasingly Scarce, Forcing Secondary Copper Rod Plants to Suspend Production Again [SMM Analysis]

According to an SMM survey, last week’s operating rate of secondary copper rod plants was 14.72% (surveyed enterprises: 15, capacity: 1.59 million mt/year), up 1.46 percentage points WoW. Last week, the average price spread between refined copper rods and scrap copper rods was 364 yuan/mt, down 332 yuan/mt compared to last week’s average of 696 yuan/mt. Last week, the average premium for secondary copper rods in Jiangxi was 200 yuan/mt, up 428 yuan/mt WoW.

Last week, northern secondary copper rod plants resumed normal production with a slight increase in operating rates. However, a secondary copper rod plant in Jiangxi reported ongoing difficulty in procuring raw materials. Combined with falling copper prices, the procurement of copper scrap has become even more challenging. With no improvement in downstream end-user consumption, the plant chose to suspend production once again, with potential resumption considered after the Mid-Autumn Festival or even National Day. Moreover, the SMM survey revealed that secondary copper rod plants that are still in production noted that due to the persistently high prices of copper scrap, the actual daily transaction price of secondary copper rods was almost identical to the quotes to ensure profit margins.

With the Mid-Autumn Festival approaching this week, some secondary copper rod plants may take an early holiday, potentially leading to a further decline in operating rates.