[SMM Analysis]Copper Market Changes Under the Cloud of Sino-US Tariffs, Refined Copper Rod Production in April May Exceed Expectations

According to SMM, the operating rate of refined copper rod producers in March was 69.65%, up 13.81 percentage points MoM, but 1.6 percentage points lower than expected. The operating rate of refined copper rod producers in March decreased by 1.49 percentage points YoY. Among them, the operating rate of large enterprises was 80.40%, medium-sized enterprises was 53.13%, and small enterprises was 54.93%.

The operating rate of the refined copper rod industry in March was recorded at 69.65%, a YoY decrease of 1.49 percentage points (the operating rate in March last year was 71.14%).

According to SMM data, the average price of SMM #1 copper cathode in March was 79,675.71 yuan/mt, up 2,812.1 yuan/mt MoM from February. With the rise in copper prices, the average price difference between secondary copper rod in Jiangxi and power-use rod in east China was 1,480 yuan/mt in March, expanding by 493 yuan/mt MoM. The consumption of refined copper rod was significantly suppressed by secondary copper rod, and the operating rate of refined copper rod in March did not meet expectations. However, excluding the impact of the Chinese New Year holiday, enterprises resumed normal operations, and the operating rate in March increased MoM, but declined YoY compared to March last year.

The raw material inventory/output ratio of refined copper rod enterprises in March was 8.47%, and the finished product inventory/output ratio was 13.00%.

Due to the gradual convergence of the premiums and discounts structure within the month, operating around parity, and some enterprises undergoing maintenance and shutdown under destocking pressure at month-end, the raw material inventory of refined copper rod enterprises was consumed in March. The raw material inventory/output ratio decreased by 3.25 percentage points MoM, and the finished product inventory was also reduced under continuous adjustment and control, with the finished product inventory/output ratio decreasing by 2.46 percentage points MoM.

The operating rate of refined copper rod enterprises is expected to reach 71.44% in April.

Since the end of March, as the possibility of a trade war intensified, market concerns over the outcome of reciprocal tariffs by the US have led to a continuous decline in copper prices. By April 7, the average price of SMM #1 copper cathode had dropped by 9.73% from the high on March 26. With the sharp decline in copper prices, new orders for refined copper rod enterprises have increased again, and orders on hand have shown significant growth. Although some end-users remain cautious, consumption has clearly improved MoM. New orders for some medium and large enterprises have nearly doubled WoW. The operating rate is expected to rise to 71.44% in April, up 1.79 percentage points MoM and 2.48 percentage points YoY. Additionally, after the Qingming Festival, under extreme market conditions, the halt in copper price declines combined with the digestion of finished product inventories may support an operating rate exceeding previous expectations in April.