SHANGHAI, Jul 14 (SMM) — Operating rate at copper cathode rod producers stood at 68.68% in June, up 0.11 percentage point month on month, but down 9.98 percentage points year on year, SMM survey showed. The operating rate of large enterprises was 68.74%, that of medium-sized enterprises was 72.62%, and that of small enterprises was 48.41%. Note: The survey covers 41 producers with a total production capacity of 11.01 million mt.
The operating rate in June was still at a low level when compared with previous years since 2016. The continuous decline of copper prices fuelled bearish sentiment among downstream producers, who were cautious about placing orders. Wire and cable companies strictly controlled raw material inventories and restocked based on production schedules, reducing demand for copper cathode rod. In response to poor sales in early June, many copper rod plants closed for maintenance during the Dragon Boat Festival so as to control inventories and reduce financial pressure, leading to sharp fall in output. In addition, power curtailment in South China, Yunnan and Guizhou, and restrictions on transportation in Guangdong due to the COVID-19 pandemic, also affected sales and transportation of copper cathode rods. Some buyers preferred secondary copper rods. Therefore, the operating rate of copper cathode rods failed to see a significant rebound.
Raw material inventory/output ratio of copper cathode rod enterprises was 6.29% in June, a decrease of 0.1 percentage point from the previous month. As producers restocked as needed, raw material inventory/output ratio did not change much.
Operating rate at copper cathode rod producers is expected at 70.15% in July, up 1.47 percentage points from the previous month. Copper prices stabilised at 68,000 yuan/mt in July, easing downstream wait-and-see sentiment. Wire and cable companies preferred copper cathode rods as the price advantage of secondary copper rods weakened significantly. This, combined with the release of downstream rigid demand, will push up operating rate.
