SMM, September 24:
According to SMM data, the operating rate of secondary copper rod producers stood at 11.99% this week, up 1.72 percentage points WoW but down 6.57 percentage points YoY. Meanwhile, the average price difference between copper cathode rod and secondary copper rod was yuan 2,114/mt, up yuan 1,348/mt WoW. In addition, the average discount of secondary copper rod in Jiangxi against copper futures was yuan 600/mt, down yuan 753/mt WoW. Copper prices broke above yuan 110,000/mt again, driven more by spot shortages that pushed premiums above yuan 1,000/mt, while the discount of secondary copper rod against futures of yuan 400-600/mt was mainly caused by elevated spot premiums. Based on SMM's gross profit model for secondary copper rod sales, the average weekly gross profit was yuan 911/mt, up yuan 418/mt WoW.
This week (September 21-24), the center of copper prices shifted notably higher WoW, and the price difference between copper cathode rod and secondary copper rod widened from yuan 2,090/mt to yuan 2,590/mt before holding in the yuan 2,140-2,210/mt range. On paper, the cost advantage of secondary copper rod recovered significantly. However, the wider price spread did not translate into actual transactions. This week's market showed a typical divergence of "widening spreads but stagnant deals," with the core contradiction being that after copper prices broke above yuan 110,000/mt, high raw material costs suppressed downstream affordability, while pre-holiday stocking demand was also constrained by invoice issues (reverse invoicing) and cautious sentiment among rod producers. The approach of the long holiday should have spurred stocking demand, but the reality was "wanting to stock but not daring to": due to policy changes and the upcoming Mid-Autumn Festival holiday, many secondary copper rod producers did have raw material stocking needs, but after copper prices broke above yuan 110,000/mt again, scrap utilization enterprises had to purchase cautiously and generally chose to wait for copper prices to pull back slightly before starting stockpiling. Even when the price difference between copper cathode rod and secondary copper rod widened to an excellent yuan 2,590/mt mid-week, rod producers almost lost purchase willingness due to cost pressure. By the end of the week, when copper prices pulled back to around yuan 110,740/mt, rod producers expected copper prices to fall below yuan 110,000/mt before they would be willing to stock up ahead of the long holiday. The procurement sentiment index fluctuated slightly in the 1.89-1.97 range but remained low throughout, and the market fell into a consensus wait-and-see stance for "even lower prices." More severely, hampered by invoice issues, many secondary copper rod producers' pre-holiday raw material inventories could not even support production during the Mid-Autumn Festival, and stockpiling efforts essentially fell through. End-user wire and cable enterprises were likewise suppressed by high copper prices and high premiums, with weak purchase willingness, and overall trading sentiment was subdued throughout the week. Overall, the core contradiction in this week's secondary copper rod market has shifted from "price spread levels" to "the double squeeze of high costs and invoice constraints on pre-holiday stockpiling": copper prices breaking above yuan 110,000/mt widened the price difference between copper cathode and copper scrap to above yuan 4,600/mt and the price difference between copper cathode rod and secondary copper rod to yuan 2,590/mt, making the substitution advantage on paper unprecedented. However, the raw material side's "following declines but not rallies" characteristic left traders saddled with high-priced inventories and kept actual procurement costs for rod producers elevated, so even with attractive spreads they could not take on more. At the same time, invoice problems from reverse invoicing surfaced intensively before the holiday, and suppliers' inability to resolve invoicing meant scrap utilization enterprises could procure only very limited volumes, with stocking demand forcibly compressed.
Next week will be the final three trading days before the National Day holiday. Until high copper prices and invoice constraints are resolved, the market will continue to see "inflated price spreads, rod producers staying on the sidelines, and sluggish transactions." The reality of insufficient pre-holiday stockpiling may leave some enterprises with production constraints during the holiday.
As the world's largest copper consumer, China's industry chain faces three major challenges: rising dependence on upstream resources, overcapacity in midstream processing, and downstream demand suppressed by high copper prices. To help the industry navigate these changes, SMM has partnered with copper industry chain enterprises to jointly compile the bilingual Chinese-English "2026 China Copper Industry Chain Distribution Map." Click this link to receive a free copy of the copper industry chain distribution map:. SMM co-production contact: Liu Mingkang 156 5309 0867
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