Copper Prices Rise as Traders Show Increasing Willingness to Pick Up Goods [SMM Analysis]

SMM, January 11: According to SMM survey data, the operating rate of secondary copper rod plants reached 24.92% this week, up 3.18 percentage points WoW but down 12.82 percentage points YoY. The average price spread of refined and secondary copper rods this week was 1,038 yuan/mt, down 309 yuan/mt from last week's 729 yuan/mt. Meanwhile, the average discount of secondary copper rod in Jiangxi was 530 yuan/mt, up 350 yuan/mt WoW. This week, copper prices rose rapidly, causing the price spread between refined and secondary copper rods to widen quickly to 1,300 yuan/mt. Although end-use consumption remained weak, many traders accelerated their cargo pick-up as the arbitrage margin expanded with rising copper prices, leading to an increase in order volumes during the week. Additionally, with marginal improvements in the supply of secondary copper raw materials, most secondary copper rod plants were able to maintain continuous production, resulting in a WoW increase in the operating rate of secondary copper rods. In several regions, local governments have required enterprises to implement "reverse invoicing" or adopt a fixed tax rate of 2%. As a result, pre-holiday stockpiling intentions remained moderate. The increased production capacity this week was mainly due to sufficient raw material supply and efforts to complete orders on hand before the logistics sector halts operations for the holiday, avoiding excessive inventory during the New Year. Currently, secondary copper rod enterprises and raw material suppliers face inconsistencies in implementing "reverse invoicing." However, with the State Council's pilot program for recycling enterprises, scrapped household appliances will be dismantled and recycled by designated pilot enterprises in the future. Secondary copper rod enterprises will be able to procure directly from these pilot enterprises without being affected by "reverse invoicing," which currently limits procurement volumes. At present, the pilot program focuses on household appliance recycling, but it may expand to include other categories in the future. For example, cables replaced under the two-network upgrade may also be dismantled and sold centrally by corresponding recycling enterprises, broadening the procurement channels for secondary copper rod enterprises. Looking ahead to next week, as the Chinese Little New Year approaches, some secondary copper rod enterprises are preparing to shut down furnaces and reduce production. Factories are expected to fully suspend operations before the Little New Year, and the operating rate of secondary copper rods is projected to decline slightly to 23.2% next week. 》Subscribe to view historical SMM metal spot prices 》Click to access the SMM copper industry chain database