The operating rate of major domestic refined copper rod manufacturers in the final week of August stood at 62.44%, up 1.24 percentage points month-on-month, 2.49 percentage points above earlier expectations and down 5.68 percentage points year-on-year.Refined copper rod operating rates rose instead of falling amid high copper prices. However, demand from the two major downstream end sectors, wires & cables and enameled wire, weakened concurrently. The industrial chain shows a clear divergence of “midstream rebound, downstream weakness”, raising questions over the solidity and sustainability of the improvement in operating rates.
I. Refined Copper Rod: Better-than-expected Upturn in Operations Driven by Structural Factors
Copper prices trended upward with volatility this week. New orders received by refined copper rod manufacturers slowed sharply, mostly consisting of pent-up rigid demand. Production was mainly sustained by existing order backlogs. Meanwhile, shutdowns of non-sample enterprises and partial order migration to sampled players lifted weekly operating rates passively. After excluding sample distortions, actual downstream demand remained stable. The higher operating rate was largely attributable to order shifting and backlog support rather than organic volume growth driven by end-user demand.
II. Downstream Consumption: Price Aversion Spreads, Overall End Demand Remains Weak
Downstream consumption stayed weak this week, with high copper prices serving as the core factor weighing on demand across the whole industrial chain. At elevated price levels, end-users including cable and enameled wire producers showed growing price aversion. Order placement slowed markedly, and purchases were limited to rigid demand. Manufacturers relied mainly on prior backlogs and withdrawals under point-priced contracts to keep production running, while new demand remained persistently sluggish.
The operating rate of cable producers came in at 66.51%, down 3.08 percentage points year-on-year. The machine utilization rate of the enameled wire sector dropped 0.40 percentage points month-on-month to 71.87%, and weekly order intake fell 3.70% from the previous week.
On inventories, end buyers turned more cautious. Raw material inventories at cable firms declined 2.8% month-on-month. Amid slower shipments, finished goods inventory days of enameled wire makers rose to 10.45 days, and inventory pressure mounted for some producers. Besides, typhoons in Zhejiang forced several motor factories to suspend production, creating a temporary drag on enameled wire demand.
Looking ahead to next week, market expectations for consumption recovery in early September are subdued, and high copper prices will constrain order continuity. SMM forecasts the cable operating rate to drop 1.32 percentage points month-on-month to 65.19%, and enameled wire machine utilization to fall to 70.13%. Downstream demand is unlikely to improve in the short term.
III. Inventory Evidence: Tight Electrolytic Copper Supply Supports Restocking, End-User Inventory Drawdown Remains Sluggish
On the raw material side, as the month-end approached and spot electrolytic copper supplies stayed scarce, refined copper rod producers became more active in restocking, pushing raw material inventories up by 2.68 percentage points month-on-month. On the finished goods side, downstream product pick-up remained steady with no bulk restocking, and finished product inventories edged higher by 0.16 percentage points month-on-month.
According to SMM weekly social inventory data for copper rods, after peaking at end-2025, copper rod social inventories posted a sharp drawdown starting in February 2026 and have since fluctuated at a low level around 10,000 tonnes. The absence of a substantial social inventory build mainly stems from the fact that finished copper rod stocks are mostly held in factory warehouses instead of public social warehouses.
At the end-user level, cable and enameled wire producers did not ramp up purchases amid low social inventories. Instead, they cut procurement and reduced raw material holdings due to price aversion, leaving inventory digestion weak in end sectors.
IV. Conclusion and Outlook: Midstream Rebound Cannot Offset Downstream Weakness; Upside for Operating Rates Is Capped
Overall, the better-than-expected rise in refined copper rod operating rates this week was underpinned by structural factors including order migration, existing backlogs and resumption after maintenance. Demand for downstream cables and enameled wire remains suppressed by high copper prices and is projected to fall next week, meaning the improvement in copper rod operating rates lacks support from genuine end orders.
Sampled refined copper rod enterprises that cut output for maintenance will resume normal production next week. SMM expects the refined copper rod operating rate to climb 0.95 percentage points month-on-month to 63.39%. Operating rates may continue to edge higher, yet the backdrop of weak end-user demand remains unchanged and upside is limited. Market participants need to closely monitor whether copper price declines can trigger the actual release of end orders.
![Copper Cathode Rod Operating Rate Uptick Has Structural Support; Downstream End-Users Remain Weak Under High-Price Pressure [SMM Analysis]](https://imgqn.smm.cn/usercenter/SiNDH20251217171711.jpg)
