[SMM Morning Meeting Summary: Trump Considers Further Tariff Hike, Copper Prices Fluctuate at High Levels] On February 13, #1 copper cathode spot prices against the SHFE 2502 contract were quoted at a discount of 20 yuan/mt to a premium of 20 yuan/mt, with an average price on par with the contract price, flat WoW. According to SMM, inventory buildup continued in major domestic regions this week, but the pace of buildup has significantly slowed compared to last week.

According to SMM survey, the operating rates of copper rod makers using copper scrap averaged 47.56% in August, up 4.54 percentage points month on month and up 3.1 percentage points year on year. (Notes: SMM surveyed 43 producers with a combined capacity of 3.83 million mt/year.)

The orders of cable companies did not improve noticeably last week. The downstream buyers were cautious about placing orders due to strong bearishness.

Operating rates at copper rod producers using copper cathode as raw material rose 4.67 percentage points on the month and 10.54 percentage points on the year to 76.4% in May, according to an SMM survey of 52 producers with a total capacity of 12.73 million mt/year. The average operating rate of large, medium-sized and small enterprises was 78.19%, 75.32% and 60.21% respectively.

Entering May, the demand for copper from the real estate industry has not improved, and new orders for civil engineering have also begun to decline. Although demand for copper wire and cable improved in May compared to April thanks to the deliveries to power grid companies and exports, the bid solicitation volume was still low. This indicates that new orders from traditional power grids in the second half of the year are not optimistic.

Last week, wire and cable companies maintained normal production before stepping up production at the end of the week when copper prices dropped.

Wire and cable: Last week, wire and cable companies maintained normal production before stepping up production at the end of the week when copper prices dropped. SMM survey showed that the precipitous drop in copper prices incentivised some downstream buyers to place orders. One large cable factory said that their orders improved noticeably last week. However, in May, the demand from real estate sector and the State Grid was not strong, denting orders at wire and cable plants. Continuously falling copper prices have kept downstream buyers cautious.

LME copper prices closed at $8,243/mt last Friday evening, a rise of 0.67%. Trading volume was 20,000 lots and open interest stood at 254,000 lots. SHFE 2306 copper contract finished at 64,940 yuan/mt overnight, up 0.87%. Trading volume was 64,000 lots, and open interest stood at 193,000 lots. On the macro front, the US dollar rose last Friday and recorded its biggest weekly gain since February, mainly due to the decline in consumer confidence index, which intensified market concerns about the US debt ceiling and monetary policy, bolstering the risk appetite for the US dollar.

LME and SHFE base metals closed mixed last Friday night.

The average operating rate of copper rod plants using copper scrap was 62.62% between April 22 and April 28, a gain of 4.35 percentage points from a week earlier, according to SMM survey of 15 plants with a capacity of 1.48 million mt/year. It was difficult for copper rod plants using copper scrap to purchase raw materials as sellers held back their cargoes amid plunging copper prices. Some plants said that they had been unable to obtain raw materials for three consecutive days, and some will be forced to shut down during the Labour Day holidays due to raw material shortages.