SMM News on June 20:
According to SMM survey data, the operating rate of secondary copper rod enterprises this week was 24.12%, down 4.91 percentage points WoW and 16.86 percentage points YoY. Meanwhile, the average price difference between copper cathode rod and secondary copper rod was 1,174 yuan/mt this week, narrowing by 154 yuan/mt MoM. Additionally, the average discount of secondary copper rod against copper futures in Jiangxi was 536 yuan/mt, narrowing by 198 yuan/mt MoM. Based on SMM's gross profit model for secondary copper rod sales, the gross profit for the week was -568 yuan/mt, expanding by 79 yuan/mt MoM.
Orders from terminal wire and cable enterprises were weak, and the backlog of finished product inventories led some enterprises to plan production halts. According to the weekly finished product inventory data of sampled secondary copper rod enterprises, the inventory was 3,350 mt, unchanged MoM. Suppliers of secondary copper raw materials, facing a 30% YoY decrease in inventory and a pullback in copper prices, intensified their reluctance to sell. Differences in policy implementation became prominent, with inconsistent implementation of "reverse invoicing" in Anhui province, leading some enterprises to suspend open-hearth furnace production pending clearer policies. Secondary copper rod enterprises maintained a cautious strategy, procuring raw materials on a daily basis to meet minimum production needs even with pending orders, as the price difference between copper cathode rod and secondary copper rod continued to operate within the range of 1,170-1,245 yuan/mt. The overall situation presented a dual pressure pattern of "shrinking end-use demand and tightening raw material supply."
Looking ahead to next week, with the narrowing price difference between copper cathode rod and secondary copper rod and a pullback in copper prices, the economic benefits of secondary copper rod will once again fade. Given insufficient downstream terminal demand, the operating rate of secondary copper rod enterprises may drop back slightly.
