The Copper Market Transformation Under the Shadow of Sino-US Tariffs: Refined Copper Rod Production in April May Exceed Expectations [SMM Analysis]

According to SMM, the operating rate of refined copper rod enterprises in March was 69.65%, up 13.81 percentage points MoM, 1.6 percentage points lower than expected, and down 1.49 percentage points YoY. Among them, the operating rate of large enterprises was 80.40%, medium-sized enterprises was 53.13%, and small enterprises was 54.93%. The operating rate of the refined copper rod industry in March was 69.65%, down 1.49 percentage points YoY (the operating rate in March last year was 71.14%). According to SMM data, the average price of SMM #1 copper cathode in March was 79,675.71 yuan/mt, up 2,812.1 yuan/mt MoM from February. With the rise in copper prices, the average price difference between secondary copper rod in Jiangxi and power rod in east China in March was 1,480 yuan/mt, expanding by 493 yuan/mt MoM. The consumption of refined copper rod was significantly suppressed by secondary copper rod, and the operating rate of refined copper rod in March did not meet expectations. However, excluding the impact of the Chinese New Year holiday, enterprises resumed normal operations, and the operating rate in March increased MoM, but declined YoY compared to March last year. The raw material inventory/output ratio of refined copper rod enterprises in March was 8.47%, and the finished product inventory/output ratio was 13.00%. As the premium and discount structure gradually converged during the month, operating around parity, and some enterprises underwent maintenance and shutdown under destocking pressure at month-end, the raw material inventory of refined copper rod enterprises was consumed, with the raw material inventory/output ratio decreasing by 3.25 percentage points MoM. The finished product inventory was also reduced under continuous adjustment and control, with the finished product inventory/output ratio of refined copper rod enterprises decreasing by 2.46 percentage points MoM. The operating rate of refined copper rod enterprises in April is expected to be 71.44%. Since the end of March, the possibility of a trade war has increased, and market concerns about reciprocal tariffs from the US have led to a continuous decline in copper prices. As of April 7, the average price of SMM #1 copper cathode had fallen by 9.73% from the high on March 26. With the cliff-like drop in copper prices, new orders for refined copper rod enterprises have increased again, and orders on hand have increased significantly. Although some end-users still hold a wait-and-see attitude, consumption has significantly warmed up MoM. New orders for some medium and large enterprises have nearly doubled WoW. The operating rate in April is expected to increase to 71.44%, up 1.79 percentage points MoM and 2.48 percentage points YoY. At the same time, under extreme market conditions after the Qingming Festival, with copper prices hitting the limit down and finished product inventories already consumed, orders on hand in April may support the operating rate of enterprises to exceed previous expectations.

SMM

The Copper Market Transformation Under the Shadow of Sino-US Tariffs: Refined Copper Rod Production in April May Exceed Expectations [SMM Analysis]

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