According to SMM, in May, the operating rate of copper cathode rod enterprises was 67.55%, down 3.64 percentage points MoM, up 0.13 percentage points from expectations, and down 2.65 percentage points YoY. Among them, the operating rate of large enterprises was 78.48%, medium-sized enterprises was 49.95%, and small enterprises was 64.5%. In May, the operating rate of copper cathode rod enterprises was 67.55%, down 3.64 ppts MoM and down 2.65 ppts YoY (70.26% in May last year). Overall, the performance of the copper cathode rod market in May was similar to that in April. As rising copper prices suppressed purchase willingness among downstream processing enterprises, a strong wait-and-see sentiment prevailed in the market, new orders at copper cathode rod enterprises continued to weaken, and order growth was significantly insufficient. Affected by low purchase willingness among downstream clients and a slowdown in the pace of cargo pick-up, finished product inventories at copper cathode rod enterprises continued to build up. Sluggish new orders, coupled with elevated finished product inventories, weighed on production, causing the overall operating rate of China's copper cathode rod enterprises to pull back significantly in May. By downstream sector, due to the rebound in copper prices, operating rates of wire and cable and enamelled wire enterprises also slipped to varying degrees. In May, days of raw material inventories at copper cathode rod enterprises were 2.06 days, and days of finished product inventories were 3.58 days. After copper prices rebounded, copper cathode rod enterprises turned more cautious in procurement, only purchasing as needed. When copper prices corrected, they restocked as needed, driving days of raw material inventories up by 0.21 days MoM. Meanwhile, orders from downstream wire and cable and enamelled wire enterprises showed mediocre performance, with demand continuing to weaken. The speed of picking up goods slowed down compared with the earlier period, pushing days of finished product inventories up by 0.23 days MoM. The operating rate of copper cathode rod enterprises in June is expected to be 66.59%. Looking forward to June, the operating rate of copper cathode rod enterprises is expected to decline by 0.96 percentage points MoM to 66.59%, and down 3.56 percentage points YoY. Although orders on hand can provide short-term support for production and stage-wise support for operating rates, as the market gradually enters the off-season, end-user demand for cables, enamelled wire and other sectors weakens, coupled with concerns over copper price fluctuations, it was originally expected that the operating rate would continue to trend weak. However, recent market conditions have changed. This week, a sharp pullback in copper prices stimulated concentrated price-based procurement by downstream buyers, leading to a significant increase in new orders for copper cathode rod enterprises, far exceeding earlier expectations. With marginal improvement on the demand side, the industry’s June operating rate has the potential to be revised upward and break through the previously pessimistic forecast.

[SMM Shanghai spot copper] During the day, copper prices pulled back, falling to around 104,800 yuan/mt, but remained at a relatively high level. Under the pressure of high copper prices, Shanghai spot copper trading was thin, and premiums widened slightly. Suppliers in Shanghai lowered their offers from a premium of 20 yuan/mt to parity, but transactions remained difficult. Available cargoes in Changzhou were tight, and some deals were done at a premium of 20 yuan/mt.

SMM Morning Meeting Minutes: Overnight, LME copper opened at $13,744/mt, dipped to $13,725/mt shortly after the opening, then its price center fluctuated upward to touch $13,822.5/mt, followed by wild swings and finally closed at $13,796.5/mt, up 0.61%. Trading volume reached 16,600 lots, open interest stood at 263,000 lots, a decrease of 3,509 lots from the previous trading day, manifested as bearish position reduction. Overnight, the most-traded SHFE copper 2607 contract opened at 105,490 yuan/mt, hitting a high of 105,700 yuan/mt right after the opening, then its price center fluctuated downward all the way, touching a low of 105,060 yuan/mt near the end of trading, and finally closed at 105,210 yuan/mt, down 0.14%. Trading volume reached 25,000 lots, open interest stood at 147,000 lots, a decrease of 1,715 lots from the previous trading day, manifested as bullish position reduction.

SMM, June 15 dispatch: Data highlights: As of Monday, June 15, SMM copper inventories in major regions across China continued destocking WoW, with total inventory reaching 207,700 mt, up 60,000 mt from 147,700 mt in the same period last year, and regional performance diverged. Specifically, in Shanghai, the pace of warehouse withdrawals accelerated, but arrivals of both imported and domestic copper cathode remained low, leading to continued destocking. In Jiangsu, insufficient arrivals weighed on consumption, and inventory declined in tandem. In Guangdong, approaching delivery prompted concentrated arrivals from smelters, while sluggish weekend consumption pushed inventory buildup. Market outlook: In the near term, arrivals of imported copper and domestic copper cathode are expected to stay low, keeping overall market supply tight. On the demand side, copper prices climbed back to high levels, curbing downstream procurement appetite. Survey data indicates that this week, the operating rate of copper cathode rod is projected to rise to 68.36%, up 0.89 percentage point WoW. Considering supply-demand dynamics, short-term market supply will remain tight while demand sticks to just-in-time procurement; China's domestic copper social inventory is expected to continue destocking next week.

[SMM Copper Wire and Cable Operating Rate Forecast] In June, as the holiday factor fully fades, enterprise production orders resume, and the copper wire and cable operating rate is expected to rise slightly by 0.12 percentage points MoM to 72.45%, basically flat YoY. However, the industry will largely enter the traditional consumption off-season in June, with conventional terminal orders such as real estate and civil sectors generally weak, making a strong recovery difficult. The subsequent trend will mainly depend on the sprint of power grid projects landing at the end of Q2, together with the pace of copper price fluctuations, which will jointly determine the extent of industry demand and operating rate repair in June.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, SHFE copper prices are expected to rise intraday and remain at a relatively high level. Coupled with the futures contract rollover, trading activity is likely to be muted, reflecting that the current price level is significantly suppressing real demand. After the rollover, the market will officially price around the 2607 contract, and close attention should be paid to the outflow of unmatched warrants. However, open interest for the SHFE copper 2606 contract currently stands at approximately 5,500 lots, indicating limited delivery participation. The concentrated release of warrants is therefore expected to exert relatively limited additional pressure on spot discounts. Supported by delivery-related dynamics, Shanghai spot copper discounts did not see a sharp decline. But if copper prices remain at current highs and demand fails to improve effectively, spot premiums may come under downward pressure.