Secondary Copper Raw Material Spot Prices Stalemate Amid Multiple Intertwined Factors [SMM Analysis]

Since the conclusion of China's economic meeting last week, the market has been closely monitoring the US Fed's actions. With the Fed's December rate-setting meeting approaching, the market widely expects a 25-basis-point interest rate cut. However, despite the expectation of a rate cut, its impact on copper prices has so far remained within market expectations. Copper prices have recently fluctuated rangebound, while secondary copper raw material spot prices have also been stuck in a stalemate.

Taking the Anhui region's secondary copper raw material quotations as an example, since November 14, the daily average price of bare bright copper (Cu＞99%) in Anhui dropped to 68,500 yuan/mt and has since fluctuated within the range of 68,500–69,500 yuan/mt. As of December 17, the average price of bare bright copper (Cu＞99%) in Anhui was 69,000 yuan/mt, up 100 yuan/mt from the previous trading day.

Supply side, the procurement of secondary copper raw materials has become increasingly challenging. Upstream traders reported that overall procurement volumes have been relatively low recently. Additionally, with a general bullish sentiment on December copper prices, traders have been holding back cargoes, leading to tight supply in the secondary copper raw material market and keeping prices firm.

Consumption side, the consumption performance of secondary rods, the primary processing direction of secondary copper raw materials, has been less than ideal. According to secondary rod manufacturers, they are currently facing a dilemma where "secondary copper raw materials are difficult to purchase even at premiums, and secondary rods are hard to sell even after quoting prices." Furthermore, some regions have reported the implementation of "reverse invoicing" starting January 2025, further intensifying the wait-and-see sentiment among secondary rod manufacturers and significantly reducing their procurement willingness. Secondary rod manufacturers are now primarily purchasing raw materials based on finished product orders, focusing on just-in-time spot procurement, which also limits the upside room for secondary copper raw material prices.

Based on feedback from traders and secondary rod manufacturers, the supply of secondary copper raw materials remains tight, supporting firm prices. However, the dual impact of weak downstream demand and heightened wait-and-see sentiment among secondary rod manufacturers due to policy changes has significantly dampened the momentum for price increases. SMM expects secondary copper raw material prices to maintain a trend of "stable with limited upside and downside" in the short term. SMM will continue to monitor the latest market developments.