SMM, December 27:
According to SMM survey data, the operating rate of secondary copper rod reached 28.23% this week (18 surveyed enterprises, total capacity of 1.94 million mt/year), down 3.72 percentage points WoW and 7.69 percentage points YoY. The average price spread of secondary copper rod against copper futures was 758 yuan/mt this week, an increase of 66 yuan/mt compared to 692 yuan/mt last week. Meanwhile, the average discount of secondary copper rod in Jiangxi was 170 yuan/mt, down 106 yuan/mt WoW.
The decline in the operating rate of secondary copper rod plants this week was mainly due to the upcoming release of policy implementation documents. Most enterprises indicated that to ensure normal production in January, they reduced operating frequency this week to reserve more secondary copper raw materials for use in early January. However, the finished product inventories of the sampled secondary copper rod plants increased from 2,300 mt last week to 5,750 mt this week. This was primarily because the price of secondary copper rod consistently remained below the advantageous line, coupled with end-user enterprises planning to stop placing new orders after the New Year, reducing the need to purchase excessive copper rod raw materials. As a result, the demand for secondary copper rod continued to decline, leading to a significant increase in finished product inventories this week.
Looking ahead to next week, with the detailed rules of policy implementation about to be released, most secondary copper rod enterprises plan to suspend production and observe the market. The operating rate of secondary copper rod is expected to be 25.72% next week.
