Recently, the supply of copper scrap has remained tight, causing significant challenges for secondary copper rod makers. Under the dual pressure of tight copper scrap supply and weak downstream demand, what is the current situation of these enterprises?
Supply Side:
According to SMM, the market circulation of copper scrap is scarce, and secondary copper rod makers are currently facing difficulties in procurement. This phenomenon is mainly attributed to the sharp rise in copper prices in late September, which once broke through the 79,000 yuan/mt mark, prompting holders to actively sell off their inventory, leading to a shortage of copper scrap in the current market. Additionally, tight supply from mines and persistently low copper concentrate TCs have forced smelters to purchase copper anodes externally as a supplement to production raw materials, which undoubtedly increases the demand for copper scrap, reducing the amount of copper scrap flowing into secondary copper rod production and further exacerbating the procurement difficulties for secondary copper rod makers.
Demand Side:
The wire and cable industry, as one of the main application fields of secondary copper rods, has seen a weakening consumption capacity, which directly pressures the market demand for secondary copper rods. According to an SMM survey, since late September, the operating rate of wire and cable enterprises has continued to decline. In the context of persistently weak consumption by downstream wire and cable enterprises, secondary copper rod makers are facing sales difficulties. Midday quotations from enterprises have failed to facilitate transactions, forcing them to lower prices to increase trading volume. However, even with price reductions, market response remains tepid, and trading volume is still unsatisfactory. Additionally, since the surge in copper prices in late September drove up copper scrap prices, the price of copper scrap broke through 70,000 yuan/mt on September 25 and has since remained above 71,000 yuan/mt. The high copper scrap prices, coupled with the difficulty in selling secondary copper rods, have severely dampened the production enthusiasm of secondary copper rod makers.
Looking ahead to November, with the end of the traditional October peak season, the industry is expected to enter the off-season. Wire and cable enterprises are cautious about orders with payment risks, worrying about whether year-end orders can be paid on time. SMM forecasts that the operating rate of copper wire and cable enterprises will only slightly increase by 0.04 percentage points to 76.6% this week. With downstream demand remaining weak and the weather turning colder, the dismantling volume at dismantling plants is expected to decrease, and the supply of copper scrap will continue to be tight. Secondary copper rod makers will still face the dual pressure of tight copper scrap supply and weak downstream demand. Currently, secondary copper rod makers are actively expanding new downstream wire and cable customers, striving to increase order volume to maintain operations.
