SMM News on May 16:
According to SMM survey data, the operating rate of secondary copper rod plants this week was 21.17%, up 0.13 percentage points WoW and down 1.9 percentage points YoY. Meanwhile, the average price difference between copper cathode rod and secondary copper rod was 1,166 yuan/mt this week, narrowing by 102 yuan/mt WoW. In addition, the average discount of secondary copper rod in Jiangxi against copper futures was 625 yuan/mt, widening by 121 yuan/mt WoW.
According to SMM's gross profit estimation model for secondary copper rod, the average theoretical gross profit was -216 yuan/mt this week, decreasing by 363 yuan/mt WoW. Due to the relatively high price of secondary copper raw materials, the sales profits of secondary copper rod enterprises have been severely compressed. As a result, the finished product inventories of weekly sample secondary copper rod enterprises reached 1,850 mt, increasing by 250 mt WoW. The increase in finished product inventories of secondary copper rod enterprises is a result of controlling shipments to reduce sales losses. As sales of secondary copper rod continue to incur losses, some secondary copper rod enterprises have considered temporarily halting production or switching to the production of copper anodes. However, due to pending orders that need to be fulfilled, they have to complete the delivery of orders before reducing production.
Looking ahead to next week, many secondary copper rod enterprises have seen an increase in their raw material inventories this week. If copper prices fluctuate upward, improving the sales profits of secondary copper rod, secondary copper rod enterprises may increase their production frequency, with the operating rate of secondary copper rod slightly rising to 24.39%.
