SMM News on June 5:
According to SMM's survey data, the operating rate of secondary copper rod this week was 32.08%, up 4.77 percentage points WoW and down 5.51 percentage points YoY. Meanwhile, the average price difference between copper cathode rod and secondary copper rod was 1,085 yuan/mt this week, narrowing by 4 yuan/mt WoW. In addition, the average discount of secondary copper rod in Jiangxi against copper futures was 428 yuan/mt, widening by 14 yuan/mt WoW. Furthermore, the average discount of secondary copper rod in Jiangxi against copper futures was 414 yuan/mt, widening by 226 yuan/mt WoW. According to SMM's calculation based on the gross profit model for secondary copper rod sales, the gross profit for the week was -339 yuan/mt, narrowing by 3 yuan/mt WoW.
Sales of secondary copper rod continued to incur losses as in the previous period. The rebound in the operating rate of secondary copper rod was due to the accumulation of many pending orders in the earlier period. The losses in secondary copper rod sales amid fluctuating copper prices could not be reversed. As the delivery date approached, secondary copper rod enterprises had to increase the number of operating days to fulfill order deliveries, leading to a slight increase in the operating rate of secondary copper rod this week. According to secondary copper rod enterprises in various regions, the "reverse invoicing" policy is being effectively implemented. With the inability of renewable resource enterprises to issue 3% VAT invoices, secondary copper rod enterprises are actively seeking ways to increase the input proportion of "reverse invoicing". Based on the current implementation status in various provinces and cities, it is expected that by 2026, "reverse invoicing" will be adopted as the main approach for raw material procurement by secondary copper rod enterprises nationwide.
Looking ahead to next week, the high raw material prices for secondary copper rod enterprises will limit further rebounds in the operating rate.
