Consumption of Copper Rod Produced with Copper Scrap Gradually Picked Up, Operating Rates Rose

SHANGHAI, Mar 27 (SMM) - The operating rates of copper rod plants using copper scrap were 61.64% between March 18 and March 24, a gain of 3.12 percentage points from a week earlier, according to SMM survey of 15 plants with a capacity of 1.48 million mt/year.

Copper prices inched up amid weaker risk aversion. New orders at wire and cable factories were gradually improving. Wire and cable factories purchased actively last week in anticipation of further gains in copper prices. Most copper rod factories using copper scrap reported increased orders last week and faster downstream delivery taking. The finished product inventory of most factories has dropped to normal levels. Notably, last week's operating rate did not rise significantly with the improvement in orders. Tight supply of copper scrap has made it difficult to purchase raw materials at the best price.

As of last Friday, copper rod produced with copper scrap in Jiangxi was quoted with a discount of 1,095 yuan/mt against SHFE front-month copper contract prices. Electric copper rod in east China was quoted with premiums of 630 yuan/mt over the contract, with a price spread of 1,725 yuan/mt between copper cathode rod and copper rod produced with copper scrap. Last week, the price difference between copper rod produced with copper cathode and with copper scrap continued to expand, boosting consumption of the latter. Combined with higher copper prices, the trades of copper rod produced with copper scrap were hectic last week, with rapid delivery taking. Destocking improved at both copper rod plants and traders.