Northern Environmental Protection Inspections Lead to Slight Decline in Secondary Copper Rod Operating Rate [SMM Analysis]

According to an SMM survey, the operating rate of secondary copper rod plants last week was 24.26% (surveyed enterprises: 18, capacity: 1.94 million mt/year), down 0.79 percentage points WoW. The average price difference between copper cathode rod and secondary copper rod last week was 836 yuan/mt, up 203 yuan/mt compared to 633 yuan/mt two weeks ago. The average discount of secondary copper rod in Jiangxi against copper futures was 242 yuan/mt, down 148 yuan/mt WoW.

According to the SMM survey, although the price difference between copper cathode and copper scrap slightly widened last week, the fluctuation in secondary copper raw material prices was almost the same as that of copper cathode, leaving no profit margin for secondary copper rod plants. In the latter half of the week, copper prices fell, but secondary copper raw material prices remained firm, causing many secondary copper rod plants to complain about the price inversion between secondary copper raw materials and secondary copper rods, with some trading days even seeing an inversion of 600 yuan/mt. As a result, secondary copper rod plants had to accept customer orders at a loss to retain their clients. Additionally, environmental protection inspections in the north led to many northern secondary copper rod plants shutting down for 1-2 days in the first half of the week. These factors contributed to the decline in the operating rate of secondary copper rod plants last week.

Looking ahead to this week, the operating rate of secondary copper rod plants is expected to slightly increase after northern plants resume production.