In November, the production of copper cathode rods far exceeded expectations, reaching the second highest level within the year [SMM Analysis]

According to SMM data, the total national production of copper cathode rods in November was 932,000 mt, up 75,100 mt MoM, up 8.76 percentage points MoM and 8.69 percentage points YoY, with an operating rate of 70%. In East China, the total production of copper rods was 615,800 mt, up 8.03 percentage points MoM, with an operating rate of 76.9%. In South China, the total production was 155,600 mt, up 18.87 percentage points MoM, with an operating rate of 75.14%. (For production and operating rate data in other regions, see the SMM database)

The production of copper cathode rods in November far exceeded expectations (originally expected to be 871,100 mt), with a total production of 932,000 mt, marking the second highest level within the year. The growth in orders for copper rods in South China was particularly notable, with a production increase of 18.87 percentage points MoM, significantly leading other regions. SMM believes the reasons for the significant exceedance in copper cathode production include:

1. The downward shift in copper prices significantly boosted orders. In November, SHFE copper prices fell from highs, dropping to near 73,000 yuan/mt mid-month, igniting enthusiasm for buying the dip. SMM data shows that the weekly operating rate of copper cathode rods remained high in November, rising to over 84% in the third and fourth weeks. Following the drop in copper prices, new orders for copper cathode rod enterprises increased significantly, with sufficient orders on hand and an active production schedule, allowing for rapid growth in production.

2. The advantage of secondary copper rods waned, while the advantage of copper cathode rods continued to manifest. According to SMM data, the average price of SMM #1 copper cathode in November was 75,128.81 yuan/mt, down 1,834.25 yuan/mt MoM. The price spread between copper cathode rods and secondary copper rods also narrowed. In November, the average price spread between secondary copper rods in Jiangxi and power rods in East China was 762 yuan/mt, narrowing by 78 yuan/mt MoM. The weakening substitution benefit of secondary copper rods, coupled with ongoing raw material shortages and environmental protection issues in the north, continued to diminish the advantage of secondary copper rods, favoring the consumption of copper cathode rods.

3. Multiple factors such as rushing exports, pushing for targets, and robust downstream demand boosted the production of copper cathode rods. SMM data shows that the operating rates in the downstream wire and cable and enamelled wire industries performed better than expected in November. According to SMM, entering November, downstream enterprises based their purchases on just-in-time procurement, with some having plans to push for annual targets, especially in the wire and cable industry where the release of orders before the year-end significantly boosted orders for copper cathode rods in November. Additionally, concerns over refund policies and increased export tariffs in 2025 prompted some downstream actions to rush exports, which also boosted orders for copper rods in November. Furthermore, influenced by the automotive and home appliance end-use industries, the order volume for enamelled wire exceeded expectations, particularly in South China, leading to a significant MoM increase in demand for copper cathode rods.

From recent insights, copper cathode rod enterprises still have a relatively sufficient number of orders on hand at the beginning of December, but new orders have begun to decline, and downstream wire and cable-related orders in the northern market will experience a seasonal decline. Additionally, after mid-December, downstream control over funds will be stricter, leading to more cautious procurement needs for copper cathode rods. However, the demand for copper cathode rods in the enamelled wire market is expected to remain positive, and the southern market, less affected by weather, will continue to see end-users rushing to meet deadlines and push performance, supporting orders in the copper cathode rod industry. Looking ahead, it is expected that the national production of copper cathode rods in December will decrease to 882,300 mt, down 5.33 percentage points MoM, and up 7.7 percentage points YoY.