Off-Season Combined with Surging Copper Prices Drags Down Orders, Copper Cathode Rod Operating Rate Further Declines [SMM Copper Cathode Rod Weekly Review]

China's major copper cathode rod enterprises recorded an operating rate of 62.56% this week (July 17 – July 23), down 2.55 percentage points WoW, 0.65 percentage point lower than expected, and down 6.81 percentage points YoY. Copper prices surged late this week, and coupled with the market being in the traditional consumption off-season and high spot premiums, downstream procurement sentiment was weak, and copper cathode rod enterprises saw few new orders. To ease operational pressure, producers actively reduced production loads. The downstream wire and cable, and enamelled wire industries also weakened simultaneously. The off-season effect combined with rising copper prices suppressed order taking, leading to a rapid shrinkage in orders, further dragging down the operating rate of copper cathode rod. On the inventory side, high copper prices combined with weak orders led to lower raw material purchase willingness, and raw material inventory fell 2.08 percentage points WoW. Downstream demand remained persistently weak, and the pace of finished product cargo pick-up slowed, pushing finished product inventory up 3.83 percentage points WoW. Looking ahead to next week (July 24 – July 30), as the market continues to see weak new orders and the weak downstream situation persists, the production cut cycle for enterprises will be prolonged. SMM expects the operating rate of copper cathode rod enterprises to decline by 3.67 percentage points WoW to 58.89% next week.