The operating rates of copper rod plants using copper scrap were 43.21% between May 27 and June 2, a surge of 4.17 percentage points from a week earlier, according to SMM survey of 15 plants with a capacity of 1.48 million mt/year). The main reason for the recovery of the operating rate last week is that some copper scrap rod factories in the sample restarted production after shutdown. Both supply and demand were weak last week.
On the supply side, although most suppliers of copper scrap were still not enthusiastic about selling, some traders needed to release some copper scrap in order to withdraw funds. Therefore, copper scrap supply increased from the previous week. However, due to the excessive total production capacity of copper scrap rods, the increase in marginal supply was not enough to meet production. Therefore, the overall supply of copper scrap continued to be tight. On the consumption side, although the price difference between copper cathode rod and copper scrap rod expanded after the copper price rebounded and the economic benefits of the latter emerged, new orders were limited after the copper price rebounded due to the weak terminal consumption.
As of last Friday, copper rod produced with copper scrap in Jiangxi was quoted with a discount of 230 yuan/mt against SHFE front-month copper contract prices. Electric copper rod in east China was quoted with premiums of 870 yuan/mt over the contract, with a price spread of 1,100 yuan/mt between copper cathode rod and copper rod produced with copper scrap. It is understood that during the week, some copper scrap rod factories encountered difficulties in capital turnover, mainly because downstream cable factories did not take deliveries.
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