Weekly copper cathode rod operating rates recover, but YoY performance will remain poor going forward

According to SMM data, the weekly operating rate (from July 11th to July 17th) of major domestic copper cathode rod enterprises rebounded as expected to 74.22%, up 7.22 percentage points WoW, 0.36 percentage points lower than the expected value, and up 1.36 percentage points YoY.

According to SMM, after a large number of production cuts and shutdowns by copper cathode rod enterprises in early July, the operating rate has gradually recovered in the past two weeks as enterprises have resumed production one after another. Meanwhile, as the center of copper prices has declined and the price difference between copper cathode rod and secondary copper rod has narrowed, leading to a bottoming-out of absolute prices, new orders from downstream copper cathode rod enterprises have seen some recovery.

However, when examining the composition of orders in detail, among the new orders of copper cathode rod enterprises, there were a significant number of previously tentatively priced orders being released, as well as forward orders placed when copper prices were low. The actual increase in consumption and shipments was not significant. End-use demand remained in an off-season atmosphere, with actual demand being relatively weak, only rebounding slightly on a MoM basis. The weekly operating rate of copper cathode rod enterprises was still weak on a YoY basis. Although there was an expectation of some growth in the operating rate for the next week (July 18-24), with an anticipated increase to 77.21%, up 2.99 percentage points MoM, it was expected to decline by 1.01 percentage points YoY. (See the figure below)

As copper prices continued to decline YoY last year, driving a concentrated release of consumption, copper cathode rod enterprises currently feel that the growth momentum of subsequent orders is insufficient. It is expected that the weekly operating rate will continue to be weak on a YoY basis in the future.