Copper Cathode Rod Production Rises MoM in September, October Performance Disappoints in Peak Season [SMM Analysis]

According to SMM data, the total production of copper cathode rods nationwide in September was 942,600 mt, an increase of 19,300 mt MoM, with an operating rate of 70.80%, up 1.45 percentage points MoM and 0.51 percentage points YoY. In east China, the total production of copper rods was 602,000 mt, with an operating rate of 75.19%, up 3.75 percentage points YoY; in south China, the total production was 156,900 mt, with an operating rate of 75.77%, up 5.88 percentage points YoY. (For production and operating rate data in other regions, see the SMM database)

At the beginning of September, copper prices fell back from highs at the end of August and remained volatile at low levels at the start of the month. On September 9, the average price of SMM #1 copper cathode hit a monthly low, then started to rise again. According to SMM data, the average price of SMM #1 copper cathode in September was 74,695.53 yuan/mt, up 1,565.3 yuan/mt MoM from August. Meanwhile, the average price spread between copper cathode rods and secondary copper rods in September was 944 yuan/mt, expanding by 304 yuan/mt MoM. Although the average price of copper cathode rose MoM in September and the price spread widened, the low-level volatility of copper prices at the beginning of the month led to a significant release of downstream consumption, supporting the production schedule of copper cathode rod plants. At the same time, many secondary copper rod plants had not fully resumed production during the policy observation period, so copper cathode rod makers were not significantly replaced by secondary copper rods. The operating rate of copper cathode rod makers rose by 1.45 percentage points MoM, exceeding the expected value by 0.32 percentage points.

October National Day Holiday Shutdown Capacity Increases YoY, Overall Consumption Weak

In October, with the National Day holiday, most copper rod plants had certain holiday arrangements or maintenance needs due to weak downstream stocking demand before the holiday. The holiday duration and impact on capacity at copper cathode rod plants in October 2024 increased YoY, dragging down the operating rate for the month. According to the SMM survey, both during and after the National Day holiday, downstream delivery volumes were lower-than-expected, and overall orders for copper cathode rod plants were suppressed. Apart from small replenishment orders released after the holiday, downstream maintained basic demand procurement. Although copper prices fell significantly, the absolute price was still difficult for downstream to accept. Looking ahead to next month, the national production of copper cathode rods is expected to decline to 879,300 mt in October, with the operating rate decreasing by 4.76 percentage points MoM.