The operating rate of secondary copper rod reached 40.18% in March, exceeding the expected 33.49%, up 13.37% MoM, but down 10.36% YoY. The main reason was the normalization of operating days for secondary copper rod enterprises in March. In addition, the continuous rise in copper prices in early March expanded the price difference between copper cathode rod and secondary copper rod to 2,600 yuan/mt, creating arbitrage opportunities for traders, who actively placed orders. Although end-use consumption orders were weak, the active ordering by traders compensated for this shortfall.
In March, the raw material inventory of secondary copper rod enterprises was 17,200 mt, an increase of only 700 mt compared to 17,900 mt in February. The surveyed enterprises indicated that the rise in copper prices did not significantly increase the market circulation of secondary copper raw materials. Many suppliers tended to increase shipments only after copper prices rose to 83,000 yuan per mt, resulting in no significant increase in raw material inventory.
In terms of finished product inventory, the finished product inventory of secondary copper rod enterprises in March was 20,800 mt, up 1,000 mt MoM. Although traders' orders increased, they were not in a hurry to pick up goods, leading to limited inventory digestion for secondary copper rod enterprises. Near the month-end, copper prices pulled back, and the average price difference between refined and secondary copper rods in March was 1,480 yuan per mt, remaining above the advantage line. Due to rigid restocking needs, end-user wire and cable enterprises were willing to place orders and pick up goods from secondary copper rod enterprises, and the order-taking situation of secondary copper rod enterprises continued to improve.
In summary, due to active ordering by traders and end-user wire and cable enterprises, coupled with more working days in March than in February (Chinese New Year holiday), the operating rate of secondary copper rod enterprises returned to normal. Looking ahead to April, as the trade tensions between China and the US intensified, copper prices fell sharply, and secondary copper rod enterprises expected raw material procurement to become more difficult. Achieving 60-70% of March's production would be the most optimistic scenario.
The raw material inventory of secondary copper rod enterprises in March was 17,200 mt.
The supply of secondary copper raw materials did not increase with the rise in copper prices. Due to the significant increase in copper prices in previous years, suppliers of secondary copper raw materials prematurely sold off a large amount of their inventory, resulting in minimal profits despite the continued rise in copper prices. Therefore, during the upward climb of copper prices this year, suppliers of secondary copper raw materials were not in a hurry to sell. When copper prices broke through 80,000 yuan/mt, suppliers even stated that they would only increase shipments when copper prices rose to 83,000 yuan/mt. As a result, secondary copper rod enterprises reported that the higher the copper prices, the more scarce the supply of high-grade secondary copper raw materials became. After copper prices jumped initially and then pulled back at month-end, the panic sentiment among suppliers intensified, and the supply of secondary copper raw materials in the market increased slightly. Consequently, the raw material inventory of secondary copper rod enterprises in March saw only a limited increase.
The operating rate of secondary copper rod enterprises in April is expected to be 36.8%.
At the beginning of April, due to the deterioration of Sino-US trade relations, copper prices fell sharply, and the market prices of secondary copper raw materials became chaotic. Secondary copper rod enterprises chose to adopt a wait-and-see approach. Additionally, the secondary copper rod prices were in a premium state against the futures market, severely dampening downstream consumption sentiment. It is expected that terminal wire and cable enterprises in April will prefer to purchase refined copper rods. With insufficient raw material procurement volume and limited new orders, the operating rate of secondary copper rod enterprises in April is expected to pull back.
