Secondary Copper Rod Plants Actively Restocked Before the Holiday, Operating Rates Steadily Increased [SMM Analysis]

According to SMM survey data, the operating rate of secondary copper rods was 16.17% last week (surveyed enterprises: 15, capacity: 1.59 million mt/year), up 0.48 percentage points WoW. Last week, the average price spread between copper cathode rod and copper scrap rod was 1,478 yuan/mt, up 493 yuan/mt from 985 yuan/mt two weeks ago. The average discount against futures contract for Jiangxi secondary copper rods was 845 yuan/mt last week, down 430 yuan/mt WoW.

After copper prices rose, the price spread between copper cathode rod and copper scrap rod quickly widened, and the economic benefits of secondary copper rods reappeared. However, secondary copper rod plants reported slow sales in the first half of the week. In the latter half, as copper prices continued to rise, wire and cable companies placed orders only for pre-holiday restocking. Overall, the rapid increase in copper prices severely suppressed the restocking sentiment of end-use wire and cable customers. With smelters still lacking ore, it is expected that copper anode processing fees in October will remain flat with September at 400 yuan/mt. Therefore, with secondary copper rod prices being 400-500 yuan/mt lower than copper anodes, secondary copper rod plants preferred to produce copper anodes. Although the supply of copper scrap slightly improved last week, the operating rate of secondary copper rods did not see significant growth.

Looking ahead to this week, some secondary copper rod plants have completed pre-holiday raw material restocking. Some plants indicated that if raw material procurement is insufficient, they may shut down for 2-3 days during the long holiday and resume production once copper scrap suppliers start shipping again.