In the last week of August, the operating rate of major domestic copper cathode rod enterprises came in at 62.44%, up 1.24 ppts WoW, 2.49 ppts above earlier expectations, and down 5.68 ppts YoY. The copper cathode rod operating rate rose instead of falling amid high copper prices, but over the same period, the two major downstream end-use sectors, wire and cable and enamelled wire, both weakened. The industry chain showed a clear divergence of "midstream rebound, downstream weakness"; the quality and sustainability of the support behind the operating rate rebound need to be called into question.
I. Copper Cathode Rod: Operating Rate Rebound Beats Expectations on Structural Factors
This week copper prices drifted higher. New orders at copper cathode rod enterprises slowed noticeably and were mostly long-suppressed rigid demand, while production relied mainly on orders on hand. Combined with production halts at enterprises outside the sample and some order transfers to sample enterprises, the weekly operating rate was pushed up passively. After excluding sample distortions, actual downstream demand was stable, and the rise in the operating rate was more the result of order transfers and support from orders on hand than organic volume growth driven by end-use demand.
II. Downstream Consumption: Fear of High Prices Spreads, End-Use Demand Remains Weak Overall
This week, downstream consumption was generally weak, with high copper prices the main factor suppressing demand across the industry chain. At elevated prices, fear of high prices intensified among wire and cable, enamelled wire, and other end users. Ordering slowed noticeably, procurement was mainly for rigid demand, and enterprise operations were mostly supported by previous orders on hand and deliveries against point-price orders, while new demand remained sluggish. The operating rate of wire and cable enterprises came in at 66.51%, down 3.08 ppts YoY; the machine operating rate in the enamelled wire sector fell 0.40 ppts WoW to 71.87%, and weekly order intake fell 3.70% WoW. Inventory side, end-user procurement turned more cautious, and raw material inventories at wire and cable enterprises fell 2.8% WoW. Amid slowing shipments, finished product inventory days at enamelled wire enterprises rose to 10.45 days, with inventory pressure increasing at some enterprises. In addition, a typhoon in Zhejiang caused some motor factories to halt production, creating a temporary drag on enamelled wire demand. Looking ahead to next week, market expectations for a consumption recovery in early September are weak; combined with high copper prices constraining the sustainability of orders, SMM expects the wire and cable operating rate to fall 1.32 ppts WoW to 65.19%, and the enamelled wire machine operating rate to pull back to 70.13%. Downstream demand is unlikely to improve in the short term.
III. Inventory Evidence: Tight Copper Cathode Supply Supports Restocking, End-User Destocking Lacks Momentum
Raw material side, with month-end approaching and spot copper cathode supply scarce, restocking enthusiasm at copper cathode rod enterprises increased, and raw material inventories rose 2.68 ppts WoW. Finished product side, downstream cargo pick-up remained moderate and no concentrated restocking emerged; finished product inventories rose 0.16 ppts WoW. According to SMM weekly data on copper rod social inventory, after shooting up at the end of 2025, copper rod social inventory began to destock sharply from February 2026 and thereafter moved sideways for a long period in a low range around 10,000 mt. Social inventory did not show significant buildup, mainly because most finished copper rod products accumulated in enterprise plant warehouses rather than in social warehouses. End-use side, wire and cable and enamelled wire did not take advantage of low inventories to increase procurement; instead, amid fear of high prices, they scaled back procurement and reduced raw material inventories, while end-use destocking remained sluggish.
IV. Conclusions and Outlook: Copper Cathode Rod Operating Rate Rebound Cannot Reverse End-Use Weakness; Upside Room for Operating Rate Limited
Overall, this week's stronger-than-expected rebound in the copper cathode rod operating rate was mainly supported by structural factors such as order shifts, orders on hand, and recovery from maintenance; downstream wire and cable and enamelled wire saw weak demand under pressure from high copper prices, and both are expected to decline next week, leaving the rebound in the copper cathode rod operating rate without end-use order support. Next week, copper cathode rod enterprises in the sample that were under maintenance and production cuts will resume normal production. SMM expects the copper cathode rod operating rate to increase by 0.95 percentage point WoW to 63.39%. The operating rate is expected to continue edging up, but the pattern of weak end-use demand remains unchanged, limiting upside room. Going forward, close attention should be paid to whether a pullback in copper prices can drive a genuine release of end-use orders.
