December Copper Cathode Rod Production Declined Again, Mainly Due to Year-End Effect [SMM Analysis]

       According to SMM data, the national copper cathode rod production in December totaled 897,700 mt, down 34,300 mt MoM, with an operating rate of 67.42%, down 2.57 percentage points MoM but up 3.82 percentage points YoY. Among them, the total copper rod production in east China was 587,900 mt, with an operating rate of 73.43%, up 7.44 percentage points YoY; the total copper rod production in south China was 150,400 mt, with an operating rate of 72.63%, up 7.20 percentage points YoY. (For production and operating rate data in other regions, please refer to the SMM database.)

       As the countdown to the year-end began in December, the price center of spot copper cathode showed a slight decline. According to SMM data, the average price of SMM #1 copper cathode in December was 74,442.05 yuan/mt, down 686.76 yuan/mt MoM. However, as the year-end approached, downstream purchasing demand gradually weakened, and copper rod and downstream enterprises focused on cash flow recovery, leading to a predictable decrease in monthly copper cathode rod production. Additionally, although the price center of copper declined, the price spread between copper cathode rods and secondary copper rods widened due to the pressure on secondary copper prices during the month. At lower copper prices, some consumption was still released, and certain copper cathode rod enterprises were supported by orders on hand, resulting in an operating rate 1.16 percentage points higher than expected in December.

       Operating Rate Expected to Drop Sharply in January Due to Chinese New Year

       With the Chinese New Year holiday starting at the end of January, most medium and large copper rod enterprises currently have orders on hand extending to mid-to-late January. It is expected that enterprises will begin maintenance gradually after mid-January. Meanwhile, as the year-end approaches, new consumption is decreasing MoM. If copper prices do not drop significantly during the month, downstream enterprises are unlikely to release substantial orders. Looking ahead, the national copper cathode rod production in January 2025 is expected to decrease to 778,600 mt, with the operating rate falling to 58.48% MoM.