Secondary Copper Market Amid Soaring Copper Prices: Tight Supply-Demand Balance and Intensified Regional Divergence at Year-End

This week, the domestic secondary copper market continued its strong trend driven by multiple favorable factors, with copper prices rising by 2,800 yuan/mt over the week, once again hitting a record high. The price of bare bright copper in Guangdong followed the increase to 82,800-83,000 yuan/mt, up 1,600 yuan/mt within the week. Despite the continuous price surge, market trading did not recover simultaneously, showing a notable "price rise but thin volume" characteristic. Supply side, since the National Day holiday, many traders of recycled copper raw materials have adopted a cautious stance toward the year-end market, actively controlling inventory levels, which led to limited actual circulating supply during this round of price increases. Most traders adopted an order-based procurement model, purchasing raw materials from the market only after receiving downstream demand for delivery, further dampening activity in the spot market. Demand side, although suppressed by high prices, end-users maintained rigid procurement to ensure order delivery, prompting secondary copper rod enterprises to passively replenish raw material inventories.

Data showed that the operating rate for secondary copper rod this week was 18.16%, rebounding significantly by 9.02 percentage points MoM, but still down 13.39 percentage points YoY. The price difference between copper cathode rod and secondary copper rod widened to 2,230 yuan/mt, up 135 yuan MoM; the average discount of secondary copper rod in Jiangxi against copper futures expanded to 1,726 yuan/mt, up 174 yuan/mt MoM. Against the backdrop of high costs, the gross profit for enterprises this week was 1,507 yuan/mt, up 153 yuan/mt MoM, indicating that although raw material prices climbed, synchronous adjustments in finished product prices still preserved limited profit margins for the processing segment.

Regional market divergence continued to highlight. In Hubei, due to limited invoice quotas in December, enterprises could only prioritize meeting invoice demands for previous orders, and production recovery remained hindered; the supply-demand relationship in the invoice market in Guangdong and Jiangxi became increasingly tight, with invoice tax rates rising to 7% and 7.5%, respectively, up significantly MoM. Invoice shortages intensified enterprises' working capital pressure, particularly constraining small and medium-sized processing enterprises. Although some raw material resources shifted to other regions after production halts in Jiangxi and Hubei, overall market supply remained in a tight balance, without showing a looser pattern despite the price surge. Approaching the year-end, the combination of tightening market liquidity and policy adjustments has further amplified the complexity of industry operations. Although copper prices still possess upside potential supported by macro tailwinds, downstream acceptance remains limited, making it difficult for actual consumption to expand in tandem. Meanwhile, structural tightness in the bill market is expected to persist until the year-end, imposing periodic constraints on enterprise production and operations.
Looking ahead to next week, market focus will center on two aspects: first, whether copper prices can stabilize above 94,000 yuan/mt—any marginal weakening in macro sentiment may trigger a price correction, thereby stimulating the release of some pent-up demand; second, the impact of year-end capital conditions on the bill market—if liquidity pressures ease, it may provide a window for enterprises to resume production. However, given the continued traditional consumption off-season and persistently high social inventory, the room for further price increases remains relatively limited. The secondary copper rod market is expected to maintain a "high-price, low-volume" tight balance, with the industry as a whole still in a phase of policy adaptation and structural deepening adjustments.