SMM, January 10:
According to SMM survey data, the operating rate of secondary copper rod plants reached 24.92% this week, up 3.18 percentage points WoW but down 12.82 percentage points YoY. The average price spread of refined and secondary copper rods this week was 1,038 yuan/mt, down 309 yuan/mt from last week's 729 yuan/mt. Meanwhile, the average discount of secondary copper rod in Jiangxi against copper futures was 530 yuan/mt, up 350 yuan/mt WoW.
This week, copper prices rose rapidly, causing the price spread between refined and secondary copper rods to widen quickly to 1,300 yuan/mt. Although end-use consumption remained weak, many traders accelerated their cargo pick-up as the arbitrage margin expanded with rising copper prices, leading to an increase in order volumes during the week. Additionally, with marginal improvements in the supply of secondary copper raw materials, most secondary copper rod plants were able to maintain continuous production, resulting in a WoW increase in the operating rate of secondary copper rods. Furthermore, several regions have received local government directives for enterprises to implement "reverse invoicing" or a fixed tax rate of 2%, which kept pre-holiday stockpiling intentions moderate. This week's increased production capacity was mainly due to sufficient raw material supply and efforts to complete orders on hand before the logistics holiday, avoiding excessive inventory during the New Year.
Looking ahead to next week, as the Chinese Little New Year approaches, some secondary copper rod enterprises are preparing to shut down furnaces and reduce production, with factories expected to fully suspend operations before the festival. The operating rate of secondary copper rods is expected to slightly decline to 23.2% next week.
