Limited orders at copper rod companies using copper cathode as feedstock

SHANGHAI, Apr 12 (SMM)—Copper rod consumption was promising in April in the SMM survey conducted before the Qingming Festival holiday on copper rod producers using copper cathode as raw material, driven by improved consumption from power grids and the release of demand from wire and cables. However, orders have been unexpectedly weak after the Qingming Festival holiday.

Some enterprises saw lesser orders last week compared to the prior week, and most of the current orders are long-term contracts, with no increase in small orders. Some of the copper rods plants have began maintenance ahead of Qingming Festival holidays, but have not resumed production. Demand from wires and cables is not sufficient enough to drive copper rod plants to maintain high operating rates. Orders at small and medium-scale orders shrank sharply compared with previous years. Poor consumption dragged on orders at copper rods producers using copper cathode. In addition, the price difference remains at around 2,000 yuan/mt between copper cathode and copper scrap. This significantly depressed demand from low-voltage wires for copper cathode rods, turning to purchase copper rods produced with secondary copper. The impact of rods produced with secondary copper on copper rods produced with copper cathode is significant. Orders for enamelled wires have been brisk and supply fell short of demand in March at many producers. However, this failed to improve consumption of copper rods produced with copper cathode based on the share of enamelled wires in the overall consumption of copper rods.

Copper processing companies are awaiting the traditional peak season. At present, copper rod companies using copper cathode are faced with various pressures like cash flow issues and slow declines in finished product inventories. Consumption of copper rods in April is unlikely to pick up anytime soon.