Weak traditional support coupled with the impact of substitute materials may cause the operating rate of copper billet producers to hit bottom again in July [SMM analysis]

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       According to SMM data, the comprehensive operating rate of copper billet producers in June 2025 was 46.15%, down 4.46 percentage points MoM and 0.69 percentage points YoY. Specifically, the operating rate of large enterprises was 49.48%, medium-sized enterprises 44.41%, and small enterprises 29.81%.

       As a traditional off-season for the copper billet market, the decline in the operating rate in June was within the expectations of small and medium-sized enterprises. Typically, due to the requirement of half-year targets, large enterprises perform relatively well in terms of production and sales in June. However, this time, affected by high copper prices, downstream purchasing demand was severely suppressed, with only a few large enterprises achieving a slight increase in their operating rates in June. In terms of inventory, the days of raw material inventories for SMM sample enterprises dropped to 6.22 days, down 0.76 days MoM; the days of finished product inventories were 8.15 days, down 0.53 days MoM.

       Looking ahead to July, there is a strong sentiment of market pessimism. According to SMM, as June-August is the traditional off-season for the copper billet market, coupled with the current high copper prices, the pressure on enterprise orders is unlikely to ease in the short term, and the market expects the operating rates of copper billet producers in July to continue to fall.SMM forecasts that the operating rate of copper billet producers in July will drop to 43.82%, down another 2.33 percentage points MoM.

       From an overall industry perspective, traditional industries, especially the real estate sector, cannot provide effective support to the copper billet market. Meanwhile, recent continuous breakthroughs in copper prices have led to a significant rise in the production costs of brass billets. To control costs, many downstream enterprises are starting to opt for alternative materials such as stainless steel, which will lead to a continuous decline in orders for copper billet producers. Additionally, the entry barriers for emerging industries like new energy are high, making it difficult for small enterprises to enter, and it is expected that more small enterprises will choose to halt production and observe. In terms of raw material procurement, according to feedback from traders in Ningbo, the supply of raw materials for copper billets in the Ningbo area is currently tight and prices remain high. Under the situation where domestic and overseas prices are inverted, enterprises mostly choose to replenish stocks domestically as needed, and will not consider large-scale overseas purchases unless copper prices significantly drop. With multiple unfavourable factors at play, SMM believes that the downward trend in the operating rate of brass billet producers in July is unlikely to be reversed.