Anhui and Sichuan Secondary Copper Rod Makers Survey: Shutdown or Operation? [SMM Analysis]

Since the "Fair Competition Review Regulations" (State Order No. 783) issued by the State Council officially came into effect on August 1, 2024, nearly half a month has passed. The regulations mainly provide clear stipulations on local tax incentives and financial subsidies, aiming to standardize fair competition review work, promote market fair competition, comprehensively optimize the business environment, and accelerate the formation and development of a unified national market.

Previously, to further enhance economic strength and industrial competitiveness, Anhui actively implemented investment promotion strategies, especially targeting the secondary copper rod industry with development potential. Through preferential policies and optimizing the business environment, it attracted enterprises to invest and set up factories. According to the SMM survey, China's secondary copper rod capacity is 8.16 million mt, with Anhui accounting for 14% and Sichuan accounting for 4%. How much impact will the new policy have on these two regions? SMM surveyed 12 secondary copper rod plants in Anhui and 2 in Sichuan, with a total capacity of 1.45 million mt, of which the total capacity of shutdown enterprises reached 900,000 mt.

From the survey results, the implementation of the new policy has had a significant impact on secondary copper rod makers in Anhui. Since July, most secondary copper rod makers in Sichuan and Anhui, due to policy uncertainties, have chosen to shut down after completing existing orders, waiting for the implementation of the policy in August before deciding when to resume production.

As of now, with the "Fair Competition Review Regulations" having been in effect for nearly half a month, the governments of Sichuan and Anhui have not yet provided clear policies or guidelines. Only a few enterprises are still in production, currently increasing the procurement of invoiced raw materials according to the new policy. These enterprises also stated that the government holds an encouraging attitude towards production, but most enterprises continue the shutdown and wait approach from July, waiting for the announcement of policy details and the implementation situation in other regions to avoid operational risks caused by blind production under unclear policies.

Looking ahead to late August, as the policy becomes clearer, secondary copper rod makers in Sichuan and Anhui are expected to gradually resume production. Some enterprises have indicated that they are ready to resume production, with clearer production plans expected after August 15. SMM will continue to update on the subsequent implementation of the new policy.