Copper Prices Fell amid Resonating Macro and Fundamentals Fronts with Firm Rate Hike Stance in US and Europe

 In terms of fundamentals, the supply of domestic copper cathode has shown signs of growth. In the short term, with the cooling weather in China, the smelters affected by the power restriction policy in east and central China have improved their production to varying degrees.

 

In terms of fundamentals, the supply of domestic copper cathode has shown signs of growth. In the short term, with the cooling weather in China, the smelters affected by the power restriction policy in east and central China have improved their production to varying degrees, and basically resumed normal production this week. In the medium term, according to SMM statistics, China's newly commissioned and newly expanded copper cathode capacity will reach 1.13 million mt/year, and most of which will gradually see their production entering the market in August, and more in 2023.

 

On the demand side, the recent impact of high temperature-induced power rationing continued to subside, while the release of downstream orders was not very smooth. The average operating rate of copper cathode rod producers stood at 66.65% as of the fourth week of August, a significant drop of 11.45 percentage points week-on-week. Rising copper prices last week weighed on downstream new orders. And high premiums also damaged the production enthusiasm of copper rod producers, with quite a few in south China suspending the production.

 

In terms of copper wire and cable, there are still companies in Sichuan and Chongqing shut down due to power cuts, and the terminal players are in a strong wait-and-see mood. The new orders from most wire and cable companies have been falling. Orders from enamelled wire companies have not changed much, and the overall performance is still sluggish.

 

The average operating rates of secondary copper rod producers added 2.03 percentage points week-on-week to 43.51% in the fourth week of August. Copper scrap supply picked up slightly last week as the scrap traders took profits after copper prices rose. Most secondary copper rod manufacturers could maintain the production with relatively sufficient raw materials. However, the sluggishness in the demand for copper cathode will not improve amid the recovery in the operating rates of secondary copper rods.