The Supply-Demand Stalemate and Price Game Under Policy Uncertainty

This week, the secondary copper market overall exhibited characteristics of "mild price increases and persistently sluggish transactions." Copper cathode futures prices fluctuated upward, driving a slight follow-up increase in the prices of recycled copper raw materials, with the price of bare bright copper in Guangdong accumulating an increase of about 300 yuan/mt during the week. However, the market trading atmosphere did not improve alongside the price recovery. Purchase willingness among secondary copper rod enterprises remained low, and the coexistence of accumulating finished product inventories and loose raw material supply reflected the current pattern of weak supply and demand.

The supply-demand fundamentals showed clear divergence. Supply side, suppliers' expectations for the future market diverged: some traders chose to hold goods and wait during price pullbacks, while increasing sales efforts to avoid risks during price rebounds. Demand side remained persistently weak. Although the price spread between primary metal and scrap widened from 1,440 yuan/mt at the start of the week to 1,680 yuan/mt, theoretically giving secondary copper rod an economic advantage, procurement by terminal wire and cable enterprises was still primarily for rigid demand, with limited new orders. According to SMM data, the operating rate for secondary copper rod this week was 18.29%, flat WoW but down 7.16 percentage points YoY, reflecting the predicament of insufficient actual demand.

Policy uncertainty has become a key factor suppressing market vitality. The detailed rules for local reward and subsidy policies involved in Notice No. 770 have not yet been clarified. Enterprises in traditional production areas like Jiangxi and Anhui mostly maintained a wait-and-see attitude, with production decisions becoming more cautious. Some idled enterprises indicated that if no clear response regarding rewards and subsidies is received after New Year's Day, they will enter the Chinese New Year holiday early. Meanwhile, approaching year-end, individual regional enterprises had to suspend production shortly due to issues with tax invoices, further inhibiting short-term operating rate increases.

The import market performance was relatively stable. Although customs clearance efficiency improved after the optimization of customs inspection procedures, recent arrivals at ports were mainly for long-term agreement orders, having limited short-term impact on the market. The gross profit from secondary copper rod sales within the week was 834 yuan/mt, down 81 yuan/mt WoW, indicating a weakening in corporate profitability. The market overall presented a state of "nominal prices without actual market." Even with secondary copper rod discounts against copper futures of 1,000-1,100 yuan/mt, intraday transactions remained poor, forcing some enterprises to further reduce prices and sacrifice profits to facilitate deals. Looking ahead to next week, market focus will center on two aspects: first, whether copper prices can stabilize within the range of 86,000–87,000 yuan/mt—if macro conditions ease and end-user restocking demand is released, secondary copper raw material prices may rebound slightly; second, the progress of policy implementation details, as their clarity will directly impact enterprise production confidence. However, amid the traditional consumption off-season and high inventory pressure, upside room for prices is limited. The secondary copper market is expected to maintain a "stable prices but sluggish volume" trend, with policy factors continuing to suppress the operating rate of enterprises. Market participants are advised to closely monitor policy developments and inventory changes, seeking structural opportunities amid fluctuations.