Copper Rod Market Concludes August with a Flat Performance Can the "Golden September" Peak Season a Turn-around?【SMM Analysis】

According to SMM, China's copper rod production in August totaled 1.0799 million mt, increased 9,900 mt MoM, with a growth rate of 0.93%. Among this, copper cathode rod production reached 923,000 mt, up 24,000 mt MoM, an increase of 2.67%; secondary copper rod production was 156,900 mt, decreased by 14,100 mt MoM, representing an 8.25% decline. In terms of operating rates, the operating rate of copper cathode rod enterprises in August was 68.37%, up 1.86 percentage points MoM, but down 5.72 percentage points YoY (the operating rate in August last year was 74.09%). Meanwhile the operating rate of secondary copper rod enterprises in August was 28.33%, decreased 2.57 percentage points MoM, but increased 3.72 percentage points YoY (the operating rate in August last year was 24.61%).

I. Market Analysis of the Copper Cathode Rod Industry

In August, the operating rate of copper cathode rod enterprises was recorded at 68.37%, up 1.86 percentage points MoM and 1.52 percentage points higher than expected, while down 5.72 percentage points YoY.

The main reason for the increase in the operating rate of copper cathode rod in August, which was higher than expected, was the decline in the operating rate of secondary copper rod. Copper cathode rod took over part of the market share of secondary copper rod, providing certain support for consumption. In addition, another factor driving the increase in the operating rate is that the average copper price in early August was lower than that in July, amid market concerns about rising copper prices. Therefore, after copper prices pulled back at the beginning of the month, pickup volume and price-locked orders increased.

However, the operating rate of copper cathode rod in August was significantly lower than the same period last year. SMM analysis attributes this primarily to the higher copper prices YoY. In August 2025, the average monthly price of SMM #1 copper cathode was 79,000.95 yuan/mt, up 5,870.72 yuan/mt YoY. High copper prices suppressed downstream purchase willingness, leading to conservative procurement and a focus on rigid demand. Combined with mediocre demand across terminal industries and a lack of significant growth drivers, overall downstream consumption did not show a clear upward trend. During the same period last year, the operating rate of secondary copper rod was greatly impacted by policies (the first month of implementation of the Fair Competition Review Regulations), resulting in widespread shutdowns of secondary copper rod enterprises. At the same time, the price difference between copper cathode and copper scrap was narrow (see the figure below), which supported consumption of copper cathode rod.

In terms of prices, 8mm copper rod processing fees in East China rebounded MoM in August, remaining at the mid-range level for the year. The average processing fee excluding premiums and discounts was 485 yuan/mt, up 10 yuan/mt MoM and 83 yuan/mt YoY. In the East China market, processing fees gradually recovered to normal levels as demand saw a brief rebound and the impact of low-priced external supply eased. However, consumption still remained weak, limiting the extent of the rebound.

II. Market Analysis of the Secondary Copper Rod Industry

The operating rate of secondary copper rod enterprises was recorded in August at 28.33%, down 2.57 percentage points MoM, but up 0.9 percentage points from expectations and up 3.72 percentage points YoY.

In August, the operating rate of the secondary copper industry declined MoM but increased compared to expectations, primarily due to policy adjustments. Secondary copper rod enterprises, driven by concerns, prioritized the procurement of recycled copper raw materials with invoices and accelerated production of finished goods using non-invoiced materials. Notably, operating rates in Jiangxi and Anhui provinces dropped significantly due to policy disruptions, but this led to a rebound in operating rates in surrounding regions, partially offsetting the lost production, which was the main reason for the higher-than-expected operating rate.

However, the operating rate for secondary copper rod in August was higher YoY. SMM analysis attributes this to the implementation of the Fair Competition Review Regulations in the same month last year, when most secondary copper rod enterprises were nearly halted due to policy impacts. This year, only some enterprises in Jiangxi and Anhui reduced or suspended production due to policy disruptions, and the reduced output in these regions was supplemented through regional transfers, leading to an improvement in YoY data.

Regarding prices, the production reductions and suspensions by secondary copper rod enterprises in Jiangxi and Anhui in August reduced market supply, pushing up selling prices for secondary copper rod and narrowing the price difference between copper cathode and copper scrap. The average price difference in August was 750 yuan/mt, narrowing by 135 yuan/mt MoM. Consequently, the gross profit margin for secondary copper rod sales increased slightly, providing minor relief to secondary copper rod enterprises' profitability.

III. Market Outlook for September

The operating rate of copper cathode rod enterprises is expected to rise to 71.93% in September, while that of secondary copper rod enterprises is projected to decline to 27.47%.

Entering September, the copper prices remained at a high level, significantly suppressing procurement demand from downstream wire and cable enterprises. No large-scale stockpiling activities were observed, and consumption of both copper cathode rods and secondary copper rods showed no clear signs of improvement. End-users are expected to enter a pre-holiday stockpiling phase in late September, supporting a rebound in total copper rod production for the month. SMM forecasts total copper rod production in September to reach 1.1123 million mt, an increase of 32,400 mt from August, up 3% MoM.

Breakdown of September operating rate forecast by Copper Rod type:

The operating rate of the copper cathode rod industry in September is expected to increase by 3.56 percentage points MoM to 71.93%. The main reasons are the arrival of the traditional peak season, with some enterprises anticipating an improvement in downstream consumption, and the continued tight supply of secondary copper rod providing substitution support for copper cathode rod consumption. However, as copper prices remain high, there are no clear signs of improvement in downstream consumption yet, and the market remains cautious about the peak season expectations for September, leaving limited room for further increases in the operating rate.

The operating rate of the secondary copper rod industry in September is expected to decrease by 0.86 percentage points MoM to 27.47%. Although the traditional peak season may bring marginal improvement in consumption demand for secondary copper rod enterprises, production pace heavily depends on the introduction and implementation details of subsequent specific policies, making it difficult for the operating rate to see a significant increase in the short term.

From the perspective of end-use industries:

- The operating rate in the Wire and Cable Industry industry is expected to see a slight increase of 0.04 percentage points to 72.46% in September. Key factors include high copper prices suppressing procurement demand, reliance on orders from State Grid for support across downstream industries, and persistently weak consumption demand lacking drivers, with no clear signs of a "peak season" arrival.

- The operating rate in the Enamelled Wire Industry is projected to rise by 2.23 percentage points MoM to 68.78% in September, primarily driven by pre-holiday stocking demand and seasonal peak season effects boosting the operating rate.

- The operating rate in the Copper Foil Industry is anticipated to increase by 1.17 percentage points MoM to 78.44% in September, still benefiting from the traditional peak season driving sustained demand recovery for copper foil. However, due to its relatively small market share, the boost to copper rod consumption remains limited.

In summary, the overall operating rate of China’s copper rod industry in August showed "a slight increase for copper cathode rods and regional divergence for secondary copper rods", with key influencing factors being high copper prices, weak end-use demand, and policy-related disruptions. Although September is a traditional peak season for the copper rod industry, market expectations primarily rely on pre-holiday stocking demand in late September. Currently, persistently high copper prices and the absence of clear signs of a consumption rebound in downstream end-use sectors have led to a lag in peak season effects. The industry remains cautious about September consumption, focusing mainly on copper price trends, signals of substantial demand improvement, and the pace of policy implementation.