In 2024, with the fermentation of the "anxiety" factor of copper supply shortage, and in the case of copper concentrate processing fees falling into the dust, approaching 0 US dollars / ton, smelter inspection and production will be intensified. On April 30, Shanghai copper refreshed a new high of 82,460 yuan/ton since May 17, 2006, and as of the close of the day on May 8, the increase was as high as 15.33% during the year.
According to SMM quotations, on April 30, the average price of SMM 1# electrolytic copper was 81,710 yuan/ton, an increase of 15.2% as of May 8.
Copper prices are high, and downstream starts are blocked
According to SMM survey data, the monthly average operating rate of China's copper enterprises in March was 69.82%, although it increased by 30 percentage points month-on-month, but still decreased by 6.83 percentage points year-on-year. Driven by orders for home appliances, new energy vehicles and new energy power generation, the operating rate of copper pipes and copper strips performed better. However, due to the impact of high copper prices and the widening price gap between refined copper scrap, the operating rate of refined copper rods has recovered limitedly.
In April, the overall operating rate of the copper industry has not been released, and the operating rate of the latest subdivided downstream fields surveyed by SMM is as follows:
In April, the operating rate of cable enterprises decreased by 13.73 percentage points year-on-year:
According to SMM research, the operating rate of wire and cable sample enterprises in April was 73.42% (64 research enterprises, with a research capacity of 3.643 million tons), an increase of only 2.51 percentage points month-on-month, a year-on-year decrease of 13.73 percentage points, and a lower than the expected operating rate of 1.83 percentage points. Among them, the operating rate of large enterprises was 78.23%, that of medium-sized enterprises was 57.90%, and that of small enterprises was 42.67%.
In April, copper prices hit new highs, which significantly inhibited the growth of new orders for cable enterprises. Although the overall downstream demand has recovered compared with March, the demand growth has been suppressed due to high copper prices, and the increase is relatively limited. In terms of industries, in April, enterprises mostly relied on the support of State Grid, photovoltaic, wind power and rail transit stock orders; Enterprises said that low- and medium-voltage orders are still weak.
It is expected that the operating rate of China's refined copper rods will drop sharply in the week of April 26 to May 2:
According to SMM research, the operating rate of major large and medium-sized copper rod enterprises in China in the week before May Day was 70.68%, up 0.93 percentage points from last week and down 7.79 percentage points year-on-year. (Research enterprises: 21, production capacity: 7.83 million tons)
The main reason for the month-on-month increase is that most of the refined copper rod enterprises in South China have a holiday and maintenance plan due to May Day, and the demand for the reserve warehouse in the week before the holiday has risen, driving the overall operating rate to rise, but the operating rate of most refined copper rod enterprises continued to be at the level of last week, and continued to overhaul or reduce production arrangements, and large enterprises began to reduce production. As a result, although production in South China has rebounded, the overall operating rate has only increased slightly. Although the operating rate in the week before the holiday rebounded driven by the reserve, it fell by 7.97 percentage points year-on-year, and the operating rate in the week of April 22-28, 2023 was 78.65%, which shows that in the context of the traditional peak season, the current operating rate is far from the normal level.
From the inventory point of view, although some enterprises in the week before the holiday due to the increase in finished product inventory, but there are large enterprises in the price correction when the downstream pick-up increased, the inventory fell sharply, the overall inventory of finished products in the week before the holiday fell by 1.02%, recorded 68,200 tons, at the same time, last week due to the expansion of the increase in raw material inventory also gradually consumed, the week before the holiday raw material inventory fell by 3.86%, recorded 39,800 tons. Entering the May Day holiday, a number of refined copper rod enterprises have successively overhauled and reduced inventory during the holiday, while the price difference of refined copper rod continues to be above 2,000 yuan/ton, and the consumption of refined copper rod has been suppressed and increased, and it is expected that the operating rate of refined copper rod enterprises will drop sharply to 62% in the week of April 26 to May 2.
The operating rate of copper rod enterprises: 61.93% in March and 56.83% in April
According to SMM's survey data on April 11, the operating rate of copper rod enterprises in March was 61.93%, higher than previously expected, and the operating rate is expected to be 56.83% in April. Specifically, in March, the copper rod market came back to the downstream after the festival to replenish the warehouse, most of the enterprise orders were relatively strong, and the refrigeration and power industries performed well, which made the operating rate rebound significantly. Specifically, the operating rate of large enterprises was 55.15%, that of medium-sized enterprises was 61.07%, and that of small enterprises was 57.09%. (Research enterprises: 56, production capacity: 2.25 million tons) It is expected that the operating rate of copper rods in April will be 50.35%, down 5.1 percentage points from the previous month.
The most important reason why the market expects the operating rate to fall in April is that copper prices rose again in early April, at a new high in the past two years, which has hit market demand harder. According to the company, the current orders from traditional industries such as plumbing valves and sanitary products have also shrunk due to the poor performance of the real estate market. The demand for orders comes more from overseas, especially in Southeast Asia and Europe, while the domestic demand is mainly supported by new energy vehicles and refrigeration parts. Most copper rod companies said that the market demand is acceptable, and they hope that copper prices will no longer fluctuate sharply, which will help orders to return to stability. To sum up, due to the high copper prices, the enthusiasm of downstream procurement has been greatly inhibited, and the market is not optimistic about orders in April.
The operating rate of enameled wire enterprises: 74.41% in March and 71.83% in April
According to SMM research, the comprehensive operating rate of enameled wire enterprises in March was 74.41%, an increase of 29.3 percentage points month-on-month, while a year-on-year decrease of 3.55 percentage points, and 4.72 percentage points higher than the expected operating rate. Among them, the operating rate of large enterprises was 79.64%, that of medium-sized enterprises was 67.82%, and that of small enterprises was 60.50%. (45 research enterprises, research capacity of 2.008 million tons)
On the whole, although the operating rate of enameled wire in March slightly exceeded expectations, it was still at a low level in the same period of previous years. In the total downstream demand has not increased significantly, but in the context of increasingly fierce competition among enterprises, the "cake" of enterprises is getting smaller and smaller, and copper prices have repeatedly hit new highs in March, which has significantly inhibited the growth of new orders. In terms of industries, the performance of orders for home appliances and new energy vehicles this month was relatively optimistic, and individual leading companies said that their output in March could achieve a year-on-year growth of 5-10%; Orders for flat wires for transformers are also very optimistic, and orders from traditional motors, electronics and other industries have not performed well.
SMM expects the comprehensive operating rate of the enameled wire industry to be 71.83% in April, down 2.58 percentage points month-on-month and 3.19 percentage points year-on-year. Although April is still in the traditional peak season stage of the industry, because the current copper price has exceeded 80,000 yuan/ton, the speed of terminal enterprises to pick up goods has slowed down again, and there are few transactions in the market, making enterprises optimistic about the growth of new orders and production in April. In addition, in the process of SMM research, a number of companies expressed concern that the process of aluminum instead of copper will be accelerated under the high copper price, although it will not have an impact in the short term, but in the long run, it may affect the order volume of copper enameled wire.
Is there a lack of copper? Lack of minerals≠ lack of copper!
Affected by the disruption of overseas mines, the supply of overseas copper mines has tightened, which is the main reason for the recent surge in copper prices. But is there really a shortage of copper in the country? First of all, we need to know that copper raw materials do not only refer to copper ore, but also electrolytic copper and recycled copper.
Copper supply updates
Copper scrap imports:
According to data from the General Administration of Customs, China's copper scrap imports in the first quarter were 55.7 tons, an increase of 15.8% year-on-year. Among them, in March, copper scrap imports reached 218,200 tons, the highest since December 2018. The surge in copper scrap imports is undoubtedly a reflection of the replenishment of feedstock by Chinese smelters in the face of tight global copper concentrate supplies.
Domestic copper scrap production:
According to SMM data, China's copper scrap output in the first quarter was 255,400 tons, down 17.2% year-on-year. Production is expected to continue to rebound to around 98,000 tonnes in April. The main reason for the decrease in copper scrap production is that since February, the price spread of refined copper scrap has widened rapidly, reaching 6,095 yuan/ton on April 26, a new high since the end of June 2022, which has stimulated copper scrap plants to switch to copper anode, resulting in a decrease in the supply of copper scrap and an increase in the supply of copper anode.
Copper Ore Supply:
According to data from the General Administration of Customs, China's imports of copper ore and its concentrate in the first quarter were 6.988 million tons, a year-on-year increase of 5.1%. In March, China imported 2.33 million tons of copper concentrate and its ore, up 5.9% month-on-month and 15.3% year-on-year. The main increase in copper concentrate imports in March came from Kazakhstan, Mexico, Serbia, the Democratic Republic of the Congo (DRC), the Russian Federation and other countries. It can be seen that in addition to Chile, Peru and other major copper-producing countries, China has been expanding other import channels.
Copper anode supply:
According to data from the General Administration of Customs, China's copper anode imports in the first quarter were 254,000 tons, a decrease of 17.24% from the first quarter of 2023. Although imports have decreased, the supply of copper anode in the domestic market has tended to be loose recently.
According to SMM's latest survey, the anode copper market in southern China turned loose in April, and the focus of processing fees rebounded, mainly due to the surge in supply. In terms of imports, the previously postponed sources of goods have arrived in Hong Kong one after another, and China's copper anode imports increased sharply month-on-month in March, but the market spot supply is still small, and there are not too many transactions; Domestically, since mid-to-late March, copper prices have soared all the way to above the 80,000 yuan/ton mark, the price spread of refined waste has continued to expand, and the overall supply of recycled copper raw materials has increased, resulting in an increase in the output of scrap anode copper. In addition, according to the SMM price, in April, the average monthly disk of the 8mm resistance rod in Jiangxi was deducted by about 1,800 yuan/ton, and the average monthly anode plate processing fee in April was 970 yuan/ton, which was converted into a profit gap of 830 yuan/ton. However, the northern market was affected by the shortage of copper concentrate raw materials, and there was no situation where the pattern turned loose.
It is expected that in May, the southern region of blister copper and anode plate processing fees will continue to rise, under the large growth of supply, smelter inventory rises, some refineries have appeared limited receipt situation, and the processing fee will be significantly raised, the southern market is expected to show a loose pattern in May.
Imports of unwrought copper and copper products:
According to data from the General Administration of Customs, China's imports of unwrought copper and copper products in the first quarter were 1.375 million tons, a year-on-year increase of 6.9%.
Domestic Electrolytic Copper Production:
According to SMM data, the domestic electrolytic copper output in the first quarter of this year was nearly 2.92 million tons, an increase of 7.64% year-on-year.
Domestic copper inventories continue to be high
Since the beginning of this year, domestic copper inventories have increased sharply and have remained at a high level in the near future. According to SMM data, on May 6, the total domestic social inventory of electrolytic copper was 404,700 tons, a new high since April 10, 2020, compared with only 167,400 tons in the same period last year, and the accumulation time this year is significantly longer than the same period in previous years.
According to SMM research and estimates, the overall supply and demand of the copper market in the first quarter were in a state of substantial surplus, and the long-term high copper inventory is also a major reflection.
In summary:
At present, there is no shortage of domestic copper raw material supply as a whole, and under the condition that high copper prices inhibit downstream consumption, the May Day replenishment is not as strong as in the same period, and copper inventories have rebounded again after a brief slight decline.
Looking ahead, domestic supply is expected to decrease due to smelter exports. However, as delivery is approaching and the spot discount is large, it is expected that smelters will still increase the volume sent to warehouses. Imported copper has also arrived in the near future, so SMM expects total supply to increase this week, but not much.
In terms of consumption, downstream consumption showed a seasonal recovery trend after the Spring Festival, but under the suppression of high copper prices, the operating rate of downstream enterprises still generally fell year-on-year, therefore, SMM believes that this week's copper market will show a slight increase in supply and poor consumption, and inventories will continue to increase this week. In terms of consumer terminals, the market outlook needs to pay attention to the consumption purchase degree after the transmission of high raw material prices.