Copper Price Pullback Sparks Rebound in Demand at Chinese Cathode Rod Enterprises

Copper prices experienced a sharp pullback this week, causing downstream demand to surge as high prices suppressed orders. According to the Shanghai Metals Market, the operating rate of major copper cathode rod enterprises in China rose to 61.2% from August 14-20, up 1.89 percentage points WoW and 2.19 percentage points from expectations.

The rebound in demand was driven by end-use industries such as cables and enamelled wire, which were stimulated by the copper price pullback. Rigid demand clients engaged in concentrated procurement, resulting in a slight recovery of overall demand. This provided strong support for copper rod enterprises' operations.

On the inventory side, enterprises took advantage of the copper price pullback to restock raw materials for rigid demand, leading to an increase in raw material inventory by 1.36 percentage points WoW. Meanwhile, downstream clients actively priced and picked up goods during the copper price pullback, resulting in a decrease of finished product inventories by 1.91 percentage points WoW.

Looking ahead to next week (August 21-27), SMM estimates that the operating rate of copper cathode rod enterprises will decrease by 1.24 percentage points WoW to 59.96%. This is due to bearish sentiment among downstream players reemerging after copper prices stabilize, and a slowdown in the growth rate of new orders.