High Price Spread Between Futures Contracts Suppresses Stockpiling, Hidden Concerns Linger; Operating Rate of Copper Cathode Rod May Continue to Fall Short of Expectations [SMM Weekly Review of Copper Cathode Rod Production]

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         Copper cathode rod: The weekly operating rate of major domestic copper cathode rod enterprises (5.2-5.8) dropped sharply to 62.79%, down 17.10 percentage points WoW, 6.61 percentage points lower than expected, and up 9.68 percentage points YoY, though the YoY increase narrowed significantly. After the Labour Day holiday, copper prices continued to fluctuate at highs, and downstream copper rod enterprises maintained a strong wait-and-see sentiment with low willingness to stockpile actively. The level of new orders for most copper rod enterprises was weak, and the proportion of orders with tentative pricing increased to some extent. Meanwhile, the current backwardation structure of SHFE copper also suppressed the willingness of copper rod enterprises to operate and stockpile. This week, the operating rate fell significantly short of expectations. In terms of specific inventories, as pre-holiday stockpiling was gradually consumed, and the operating rate fell short of expectations after the holiday, coupled with the need for copper rod enterprises to reduce inventory levels based on subjective strategies, the raw material inventories of copper cathode rod enterprises decreased by 31.81% WoW to 35,700 mt, and finished product inventories decreased by 12.95% WoW to 58,150 mt. Looking ahead, the impact of the Labour Day holiday will be excluded next week, and the operating rate of copper cathode rod enterprises is expected to recover to 73.48%, up 3.82 percentage points YoY. However, although new orders for copper rod enterprises have not significantly weakened, shipment efficiency and orders on hand have declined WoW. If high copper prices and high month-end spreads persist, there is still a possibility that the operating rate of copper cathode rod enterprises may fall short of expectations.