High copper prices and wide price spread between futures contracts constrain shipments, with insufficient momentum for operating rate increase of copper cathode rod producers [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 increased to 73.26% for the week of (5.9-5.15), up 7.96 percentage points WoW, 3.93 percentage points lower than expected, and the YoY growth rate narrowed to 3.6 percentage points. This week, the center of copper prices continued to rise. Meanwhile, the high price spread between futures contracts under the backwardation structure also suppressed downstream procurement demand. New orders for copper cathode rod enterprises remained weak. Additionally, as the delivery date approached, the shipment pace also weakened WoW, suppressing the recovery of the operating rate of copper cathode rod enterprises. Furthermore, due to the risks brought about by the price spread between futures contracts, some copper cathode rod enterprises voluntarily cut production to reduce inventory, which also pulled down the operating rate this week to a certain extent. In terms of specific inventory, due to the operating rate still falling short of expectations and the destocking demand before delivery, as well as some enterprises being in a maintenance shutdown period, the raw material inventory of copper cathode rod enterprises decreased by 0.73% WoW, recording 33,950 mt. This week, finished product inventories increased by 8.12% WoW, recording 59,900 mt, due to the WoW growth in the operating rate and the decline in the shipment pace. Looking ahead, copper cathode rod enterprises are currently not optimistic about the market outlook. There are some production cut plans for next week. It is expected that the operating rate of copper cathode rod enterprises will only slightly increase to 74.87% for the week of (5.16-5.22), up 1.61 percentage points WoW and 10.41 percentage points YoY.