SMM Analysis: Copper Billet Supply-Demand Pattern and Development in 2025 [SMM Copper Industry Conference]

On April 22, at the CCIE-2025SMM (20th) Copper Industry Conference and Copper Industry Expo - Copper Rod and Bar Processing Industry Development Forum, hosted by SMM Information & Technology Co., Ltd., SMM Metal Trading Center, and Shandong Aisi Information Technology Co., Ltd., with Jiangxi Copper Corporation and Yingtan Land Port Holding Co., Ltd. as the main sponsors, and Shandong Humon Smelting Co., Ltd. as the special co-organizer, and Xinhuang Group and Zhongtiaoshan Nonferrous Metals Group Co., Ltd. as co-organizers, SMM Senior Copper Analyst Huang Yutong shared insights on the 2025 copper rod supply-demand landscape and development. 01 Insight into 2025: Copper Rod Market Supply Landscape SMM 2024 Analysis of National Copper Rod Categories, Brass Rod Production Processes, and Representative Enterprises Brass rods dominate the national copper rod market, with continuous casting processes becoming mainstream in brass rod production in recent years. Many companies are actively positioning themselves in the continuous casting and extrusion rod sectors, highlighting a competitive market landscape. ►SMM Analysis Brass rods account for 80% of the national copper rod market, holding an absolute dominant position. Among them, ordinary brass rods (H62, etc.) account for over 50% of the share, known for their good mechanical properties, ease of processing, and corrosion resistance, widely used in valves, hardware, and decorative items. Continuous casting rods, using a continuous pouring process, have advantages of high production efficiency and low costs. In 2024, continuous casting rods will occupy about 75% of the copper rod market share. With many enterprises entering this market, there is a severe surplus in capacity, leading to intense competition and gradually decreasing TC. Large-scale copper rod factories, capable of producing both continuous casting and extrusion rods, dominate the market due to their scale and technological advantages. Other companies focusing on extrusion rods rarely produce continuous casting rods, concentrating mainly on extrusion rod orders. SMM 2024 Analysis of Regional Distribution and Enterprise Scale Proportions of National Brass Rod Capacity Brass rod capacity is highly concentrated in Zhejiang, Jiangxi, Guangdong, and Anhui. Large enterprises lead the capacity landscape, with industrial cluster advantages becoming prominent. ►SMM Analysis Reasons: Regions like Zhejiang, with a long-standing industrial foundation, have developed complete and mature upstream and downstream industry chain support systems, forming industrial clusters that attract investment and businesses. Convenient transportation facilitates raw material procurement and product sales, being close to consumer markets and enabling quick response to customer needs. Outlook: Under industrial upgrading, these regions may increase R&D investments in brass rod production processes and new material applications, moving towards high-end brass rods. They might also drive surrounding development through industrial relocation and regional cooperation. Analysis of Brass Rod Raw Material Composition and Secondary Copper Raw Material Imports Secondary brass raw materials account for 40% of imports: In 2024, secondary copper (alloy) raw material imports reached 2.25 million mt, with annual imports of secondary brass raw materials accounting for 15.13%, totaling 340,400 mt. From January to February 2025, cumulative imports of secondary copper (alloy) raw materials were 382,500 mt, up 12.86% YoY, with 49,700 mt of secondary brass raw materials imported. In 2025, trade and tariff impacts will alter the US supply landscape. ►SMM Analysis In 2025, due to the tense Sino-US trade relations and tariff uncertainties, the US's position as the largest supplier of secondary copper raw materials continues to weaken. In January, the US exported 39,400 mt of copper scrap to China, down 10.32% MoM, accounting for 20.81% of China's total imports. In February, exports to China dropped to 31,400 mt, down 20.35% MoM, with its share declining to 16.22%. In March, exports plummeted to 22,500 mt, down 28.34% MoM, with its share significantly dropping to 11.85%, ranking second. The pie chart of import sources for secondary brass raw materials shows that the US accounts for 45%, and its reduced supply will inevitably impact the overall import landscape. On the other hand, the European market, with high brass return rates and rising prices, has seen a decline in purchase willingness, making it difficult to maintain stable import volumes. 2025 Brass Rod Industry Bottlenecks: Analysis of Output Decline and Influencing Factors In 2025, the brass rod industry faces constraints from tariffs, raw materials, environmental protection, and market demand, leading to output declines and lower operating rates, posing development bottlenecks. ►SMM Analysis 2025: 1. Tariff policies: Higher costs and trade barriers for downstream brass rod exports. 2. Tight raw material supply. 3. Lead-free trend phasing out outdated capacity: For example, the EU will implement stricter environmental regulations in 2025. 4. Weak market demand: Post-real estate cycle demand is weak, with segments like hardware and bathroom fixtures remaining sluggish. Coupled with volatile copper prices, downstream stocking is cautious, leading to insufficient demand, lower operating rates, and difficulty in increasing production. 02 Exploring 2025: Copper Rod Market Demand Trends Downstream Application Structure of Brass Rods (Bathroom Hardware Dominates) In recent years, the real estate sector has been in a downturn, with completed investment and funding sources showing a downward trend. Most of the year-on-year growth in commercial property sales was negative, indicating significant sales pressure. After the Chinese New Year in 2025, most companies saw moderate order recovery, but demand for bathroom fixtures remained weak. It is expected that the real estate market will see limited recovery in 2025, with new construction and completion areas likely to remain low, further dragging down construction copper demand. Real Estate Downturn Pressure: 2024 Sanitary Ware Market "Volume Up, Price Down" In 2024, China's sanitary ware exports grew by double digits, but unit prices fell, showing a "volume up, price down" trend, intensifying market competition and compressing profits. Impact of NEV and Mobile Phone Industries on Brass Rod Demand While NEV production continues to grow, the growth rate is slowing. Its production and sales volume, along with high copper usage density, boost brass rod demand. The mobile phone industry, with small production fluctuations and limited brass rod usage per unit, has a relatively minor impact on brass rod demand. ►SMM Analysis Policies supporting the NEV industry (such as car purchase subsidies and tax incentives) and increased consumer awareness and acceptance of NEVs are driving production. SMM expects global NEV production to continue climbing in the coming years, but at a slower pace. China's mobile phone production has shown some volatility in recent years but no clear upward or downward trend. The smartphone market is gradually saturating. Additionally, while brass rods can be used in electrical connectors and shielding components in phone manufacturing, the demand is relatively limited compared to NEVs. Limited Support for Brass Rod Market Demand from the Air Conditioning Industry – Based on Production and Sales Data The air conditioning industry, whether household or commercial, has a large production base, with substantial ownership and new demand. This large production base increases the use of brass rods. Major air conditioner producers like Midea and Gree, with annual production in the tens of millions, significantly drive brass rod usage. ►SMM Analysis The refrigeration industry accounts for 9% of downstream copper rod applications, providing strong support for the copper rod market. In 2023, China produced 168 million air conditioners, and in 2024, production reached 202 million, up 20.24% YoY. Increased air conditioner production boosts brass rod demand: As a key material for condenser tubes and valves, each air conditioner consumes about 1.8-2.2 kg, resulting in a 2024 demand of 36,000-44,000 mt. Air conditioner production is highly seasonal. In March, household air conditioner production schedules peaked, with domestic demand expected to bring significant increases. Despite Trump's announcement of additional tariffs on home appliances, air conditioner exports have not been significantly impacted; SMM expects the 2025 home appliance industry's copper consumption to be 2.22 million mt, up 0.91% YoY. 03 Outlook: Future Development Trends of the Copper Rod Market Focus on 2025: Impact of High Copper Prices on the Brass Rod Market 1. High copper prices suppress downstream orders: In industries like bathroom fixtures and hardware, where profit margins are already thin, the significant rise in costs reduces product price competitiveness, lowering customer purchase willingness and reducing order numbers. 2. LME and Comex price spreads hit record highs, leading to losses for imported secondary copper raw materials. "Reverse invoicing" and the Fair Competition Review Regulations have somewhat inhibited the release of domestic raw materials. ►Impact Analysis: "Reverse invoicing": 1. Limits the scale of raw material supply. 2. Regional enforcement differences lead to supply instability. Fair Competition Review Regulations: 1. Regulate the raw material market competition environment. 2. Provide a buffer period for policy implementation. ►Future Outlook: 1. 2025 is a transition year for "reverse invoicing." Once fully implemented, if resource recycling companies face operational difficulties or exit the market due to policy adjustments, brass rod companies' raw material supply channels may decrease. 2. After the policy is formally implemented, entry barriers for new companies may increase, and existing companies will need to plan expansions more cautiously. Local governments suspending investment promotion work will add more uncertainty for brass rod companies when planning new capacity or expanding production, affecting future capacity and raw material demand planning. Domestic demand is unlikely to grow, and overseas market breakthroughs may be interrupted Domestic: Real estate drag and insufficient impetus from emerging industries Overseas: Trade policy restrictions ►SMM Analysis Domestic Demand: 1. Traditional industry demand is weak: The real estate market's downturn leads to a decline in bathroom fixture demand, which is unlikely to recover in the short term. 2. Insufficient impetus from emerging industries: While NEVs are on the rise, the production of some high-performance alloy components has technical barriers, limiting participation to a few companies. Overseas Markets: Trade policy restrictions: The US is a significant source of secondary copper raw materials, and tariffs have halted US supplies, increasing procurement costs. Simultaneously, downstream export orders are shrinking due to tariffs, such as during the peak season for refrigeration orders in March 2025, but exports of bathroom hardware to Europe and the US were affected.