Copper rod plants using copper scrap as raw material stopped production

The average operating rate of copper rod plants using copper scrap was 31.76%, a drop of 17.44 percentage points from a week earlier, according to SMM survey of 15 plants with a capacity of 1.59 million mt/year.

The average price spread between copper rod made using copper cathode and using copper scrap expanded 280 yuan/mt and stood at 2,333 yuan/mt. In the week ending April 19, SHFE copper prices further surged driven by LME copper prices prices. The discount of copper rod made from copper scrap against SHFE copper prices was 1,927 yuan/mt, while the processing fee for anode plates was 850 yuan/mt. As the sales profit of anode plates was nearly 1,000 yuan/mt higher than that of copper rod made from copper scrap, copper rod plants using copper scrap as raw material currently produce anode plates five days a week. Copper rod plants using copper scrap as raw material without anode plate production capacity stopped production.

Since March, the output of anode plates has been increasing. The smelters reported that the inventory of anode plates can meet the factory production until mid-May and limited the purchase of anode plates. Some copper rod plants sold anode plates with a processing fee of about 1,100 yuan/mt. Most of copper rod plants using copper scrap could sustain their production of anode plates for 2-3 days with existing inventories.

As the holiday approaches, downstream cable companies will have the need to replenish their inventory of raw materials. If the orders increase, copper rod plants using copper scrap as raw material will still produce copper rods. It is expected that the average operating rate will pick up slightly in the week of April 22.