"Reverse Invoicing" Becomes a Hot Topic Again; Secondary Copper Rod Enterprises Respond Differently [SMM Analysis]

SMM, December 20:

       According to SMM survey data, the operating rate of secondary copper rod producers reached 31.95% this week (18 surveyed enterprises, total capacity of 1.94 million mt/year), up 0.4 percentage points WoW but down 7.25 percentage points YoY. The average price spread of refined and secondary copper rods this week was 692 yuan/mt, a decrease of 327 yuan/mt compared to last week's 1,019 yuan/mt. Meanwhile, the average discount of secondary copper rod in Jiangxi was 64 yuan/mt, up 376 yuan/mt WoW.

       The SMM survey also revealed that enterprises in Hubei and Sichuan have started issuing risk warnings to upstream suppliers regarding raw material price fluctuations this week. These enterprises are concerned that the implementation of the "reverse invoicing" policy starting January 2025 may lead to price volatility in secondary copper raw materials, raising concerns about market instability. As a result, they plan to remind suppliers to complete order deliveries by December 25 or 26 and may temporarily halt production in January to observe market changes. Currently, secondary copper rod enterprises in Hubei, Sichuan, and other regions have not received specific notifications regarding the implementation of the "reverse invoicing" policy. To meet downstream customer demand, enterprises in Sichuan and Hubei have started full-capacity production this week, continuing until month-end to prepare for potential production halts in January. Consequently, the operating rate of secondary copper rod producers slightly increased this week.

      Looking ahead to next week, some enterprises in certain regions have heard that Sichuan and Hubei enterprises may cut production in January. These enterprises plan to ramp up production next week to build some inventory for capturing market share in January. Therefore, the operating rate of secondary copper rod producers is expected to continue rising next week.

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