Copper Cathode Rod Operating Rate Plummets Amid Surging Prices and Weak Demand
China's major copper cathode rod enterprises have seen their operating rate decline due to weak demand and surging copper prices. The operating rate dropped to 62.56% in the week of July 17-23, a decrease of 2.55 percentage points from the previous week. This is also 0.65 percentage point lower than expected and 6.81 percentage points below last year's level. Copper prices rose at the end of the week, but the market was already in its traditional consumption off-season, which combined with high spot premiums to suppress demand. As a result, copper cathode rod producers reduced production loads to ease operational pressure.
The downstream wire and cable, as well as enamelled wire industries, also weakened simultaneously. The high copper prices and weak orders led to lower raw material purchase willingness, causing raw material inventory to fall by 2.08 percentage points in the week. However, finished product inventory rose by 3.83 percentage points due to weak demand and slower cargo pick-up.
SMM expects the operating rate of copper cathode rod enterprises to decline further next week, dropping by 3.67 percentage points to 58.89%. This is because the market is expected to continue seeing weak new orders and a persistent weak downstream situation.