June Copper Cathode Rod Operating Rate Recovers YoY; Weak Subsequent Orders Weigh on July Operation [SMM Analysis]

According to SMM, the operating rate of copper cathode rod enterprises in June was 68.71%, up 1.16 percentage points MoM, 2.11 percentage points higher than expected, and up 1.42 percentage points YoY. Among them, the operating rate of large enterprises was 80.34%, medium-sized enterprises 50.14%, and small enterprises 64.16%.

In June, the operating rate of copper cathode rod enterprises was 68.71%, down 1.16 percentage points MoM, and up 1.42 percentage points YoY. (The operating rate in June last year was 67.29%.)

Overall, in June, the operating rate of secondary copper rod enterprises remained sluggish, so some market demand naturally shifted to copper cathode rods, driving resilience in new orders for copper cathode rods and strongly supporting production; meanwhile, copper prices fluctuated notably during the month. When prices pulled back significantly, downstream enterprises concentrated on pricing and stockpiling, releasing raw material procurement demand, which further boosted copper cathode rod production and pushed up operating rates. By downstream sector, the pullback in copper prices at month-end drove a notable increase in new orders for wire and cable and enamelled wire, but due to constraints from existing production schedules, overall operating rates pulled back slightly.

In June, days of raw material inventories for copper cathode rod enterprises were 1.94 days, and days of finished product inventories were 3.44 days.

This month, affected by wild swings in copper prices, rod enterprises were generally cautious in raw material procurement, mostly purchasing as needed, and only restocking slightly when copper prices pulled back. Days of raw material inventories decreased by 0.12 days MoM. At the same time, downstream wire and cable and enamelled wire producers accelerated their cargo pick-up pace, speeding up finished product destocking, which drove days of finished product inventories down by 0.14 days MoM.

The operating rate of copper cathode rod enterprises in July is expected to be 66.16%.

Looking ahead to July, the operating rate of copper cathode rods is expected to decline by 2.55 percentage points MoM to 66.16%, and by 0.35 percentage points YoY.Currently, enterprises’ earlier orders on hand are gradually entering the final stage, and downstream players are taking a wait-and-see attitude towards future copper price trends. New orders are expected to be weak, weighing on production loads. Markets outside China are also entering the traditional consumption off-season, weakening external demand support. Although the proportion of foreign trade copper rod consumption is not high overall, it will still pressure the industry’s overall operating level downward.