Operating Rate of Copper Cathode Rods Declined as Expected: Why Did Market Sentiment Turn Cautious? [SMM Copper Downstream Weekly Survey]

This week, the SMM survey covered the production and sales of major domestic medium and large copper rod makers. The comprehensive operating rate was 79.32%, down 2.40 percentage points WoW and 1.54 percentage points lower than expected (surveyed enterprises: 21, capacity: 7.83 million mt).

During the Mid-Autumn Festival, copper cathode rod makers conducted maintenance as needed, leading to a weekly decline in the operating rate. From the consumption side, most enterprises reported that downstream pick-up pace during the festival was lower than expected. Additionally, the rise in copper prices, following previous price jumps and pullbacks, heightened market caution. If copper prices remain high, there are concerns that downstream inventory buildup before the National Day holiday may also fall short of expectations.

From the inventory perspective, the raw material inventory of major domestic copper cathode rod plants slightly decreased by 4.44% WoW to 36,600 mt due to post-holiday consumption. Meanwhile, finished product inventories increased by 16.78% WoW to 67,500 mt as major copper cathode rod plants began stocking up on finished products.

Looking ahead to next week, given the current production schedule and downstream rigid demand, coupled with the pre-National Day finished product stocking of copper cathode rod plants, the weekly operating rate is expected to rise to 83.69%.

It is worth noting that the US Fed cut interest rates for the first time in four years, adding to market caution. Whether funds will flow back to domestic entities to boost the real economy or into commodities remains to be seen, requiring continuous monitoring of subsequent data and price trends. Additionally, some large enterprises have reported a significant improvement in home appliance orders, possibly due to the "trade-in" policy driving consumption growth, leading to restocking by related downstream enterprises.