New Policies Gradually Clarified, Secondary Copper Rod Plants Actively Resumed Production [SMM Analysis]

Published: Sep 24, 2024 10:31 (GMT+8)

Source: SMM

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According to SMM survey, the operating rate of secondary copper rod plants last week was 15.69% (surveyed enterprises: 15, capacity: 1.59 million mt/year), up 3.4 percentage points WoW.

According to SMM survey, the operating rate of secondary copper rod plants last week was 15.69% (surveyed enterprises: 15, capacity: 1.59 million mt/year), up 3.4 percentage points WoW. Last week, the average price spread between copper cathode rod and secondary copper rod was 985 yuan/mt, up 340 yuan/mt from 645 yuan/mt two weeks ago. The average discount against futures contract for secondary copper rod prices in Jiangxi last week was 415 yuan/mt, down 317 yuan/mt WoW.

Last week, the rapid rise in copper prices widened the price spread between copper cathode rod and secondary copper rod, but the price spread still remained below the advantage line. Secondary copper rod plants indicated that end-user demand has yet to show improvement. According to SMM survey, although the enforcement of Order No. 783 in Jiangxi has been relaxed, the extension of policies in various regions depends on the local government's financial capacity. During the extension period, related subsidies and business preferential policies will be renegotiated. Secondary copper rod enterprises indicated that the newly negotiated policies are likely to be less favorable than before, prompting some enterprises to consider relocating to provinces with better policies. Currently, secondary copper rod enterprises report that the local government has not yet implemented the extension notice of Order No. 783, with a definite result expected by the end of September. Regarding the progress of tax and award subsidies for secondary copper rod plants in August, enterprises in Hubei and Jiangxi have not yet received responses from the local government, while those in other regions indicated that everything will temporarily continue under the old policies.

Looking ahead to this week, secondary copper rod plants in Jiangxi and Hubei are expected to resume production, and the operating rate of secondary copper rods will be restored. Additionally, during the rising cycle of copper prices, secondary copper rod plants will opt to accept high-priced copper scrap, temporarily alleviating the issue of insufficient raw material procurement.

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