Copper Price Pullback Spurs Surge in Price-Fixing Orders, End-User Wait-and-See Stance Depresses Operating Flexibility

Copper price consolidation disrupted the production pace. The operating rate of copper cathode rod enterprises in China pulled back slightly recently, with the latest reading reaching 65.22%, down 2.13 percentage points WoW and down 8.79% YoY.

This week, copper prices were in the doldrums overall. Downstream new orders recovered slightly, and most producers maintained stable output. However, some rod plants cut production proactively according to their own production schedules, directly dragging down the overall operating rate of the industry. On Thursday, copper prices fell sharply, spurring downstream users to engage in concentrated restocking and batch fixed-price purchases. Many copper rod plants saw their new orders double, and the scale of fixed-price purchases at some enterprises far exceeded normal levels. However, these orders were mostly scheduled for production next week and did not boost output this week. Faced with a surge in short-term orders, many rod plants implemented risk-control measures, hedging against price risks by raising copper rod processing fees, requiring additional margins, and other methods.

End-use demand, the two core consuming industries—wire and cable and enamelled wire—actively took orders as copper prices pulled back, driving a simultaneous improvement in orders and effectively supporting the basic operation of the copper rod industry.

Inventory side saw structural differentiation, with the overall market entering a destocking phase. Copper prices fell sharply near the weekend, prompting copper rod enterprises to actively replenish raw materials. Their latest raw material inventory rose 2.15% MoM. As downstream users concentrated purchases, enterprises' finished product inventories fell 2.38% MoM. Meanwhile, the market remained cautious about orders transacted in a concentrated manner on Thursday, and a large volume of goods may be difficult to be picked up by the month-end. Coupled with the approaching semi-annual reporting period, some enterprises took the initiative to scale back order intake to mitigate operational risks.

Looking ahead, the weakening of copper prices has amplified the downstream's "rush to buy amid continuous price rise and hold back amid price downturn" mentality, gradually cooling procurement enthusiasm. Copper rod enterprises also harbored concerns: if copper prices continue to decline, earlier priced orders may face delays in cargo pick-up. Although industry operating rates will see a short-term rebound, the extent of the increase is likely to fall short of market expectations.