Gradual resumption seen in China's copper processing sector

China's 1# refined copper spot prices stood at Yuan 101,858/tonne on February 27, falling slightly by Yuan 13/tonne day on day, according to Mysteel's assessment. Specifically, spot prices in Shanghai ranged between Yuan 101,580-102,230/tonne, averaging at Yuan 101,825/tonne. The 1# refined copper average spot premium in Shanghai was Yuan 290/tonne, falling by Yuan 40/tonne compared with the previous trading day.

Trading activity in China's refined copper market gradually recovered. Following the Chinese New Year (CNY) holiday, copper prices edged higher before experiencing minor fluctuations, and downstream copper processors have resumed operations in succession. With the weekend and month-end approaching, some downstream enterprises actively replenished raw materials, while smelters and traders were also relatively proactive in selling. Mysteel's survey covering 56 refined copper trading enterprises (including traders, smelters, and downstream fabricators) in China indicated that the daily spot transaction volume totaled 37,300 tonnes on February 27, rising by 11,900 tonnes or 46.79% compared with the previous trading day. However, smelters maintained normal production during the holiday, leading to a significant post-holiday build-up in China's refined copper retail inventory, which exerted considerable pressure on spot premiums. Looking ahead, as consumption gradually recovers and the near-month Contango spread remains wide, spot premiums are likely to see a modest rebound.

Regarding the resumption status of downstream copper processors, Mysteel conducted a survey released on February 27, covering 69 copper rod manufacturers, 16 copper plate/strip manufacturers, 17 copper foil manufacturers, 43 copper tube manufacturers, and 12 copper bar manufacturers in China's major markets including Shanghai, Jiangxi, Guangdong, Tianjin, etc. The survey results showed that 73.91% of copper rod enterprises have resumed operations, with refined copper rod producers accounting for the majority, while 93.75% of copper plate/strip enterprises, 94.12% of copper foil enterprises, 97.67% of copper tube enterprises, and 75% of copper bar enterprises have all resumed operations.

Additionally, 36% of copper rod enterprises have already resumed production, mostly refined copper rod producers. Secondary copper rod producers may resume production around early March, constrained by industry policies and insufficient downstream demand. Furthermore, end-user industries such as wire and cable saw relatively later resumption, limiting order intake and production recovery for some copper semis manufacturers. Therefore, overall copper demand in the market remains in a gradual recovery phase. Mysteel's 31 Chinese copper rod sample manufacturers with a total annual capacity of 6.01 million tonnes and 6 sample traders reported that order volumes increased by 800 tonnes or 10.90% day on day, reaching 8,300 tonnes on February 27, with refined copper rod transactions growing by 1,100 tonnes or 17.44% to 7,400 tonnes, but secondary falling by 300 tonnes or 25% to 900 tonnes. 

Looking ahead, slowly recovering demand and persistently high retail inventory will continue to weigh on China's copper prices. As March and April represent the traditional peak consumption season in China's copper industry, downstream demand is expected to improve steadily. At that point, copper prices may regain fundamental support.

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