Logistics transportation has been interrupted in most parts of central and northern China due to severe cold waves and blizzards, according to Mysteel's survey. Several highways in Hebei were temporarily closed in the second half of last week, allowing only large trucks to pass. However, as the cold wave has gradually shifted to Southeast China this week, the snowfall in northern China has weakened significantly and the local road traffic is also gradually recovering. In addition, the earthquake in Northwest China has also impacted local logistics. The detailed industry surveys are as follows:
Refined copper
Copper smelters in North China have been significantly affected by blizzards, mainly in cargo transportation. The situation had gradually improved since December 18, but a shortage of vehicles still hindered them. Several enterprises have been shut down due to local power supply problems caused by weather factors, and the resumption time is still unknown. In contrast, the production and transportation of smelters in Northeast China is less affected by weather factors. However, the shipment of smelters in Northwest China has been slowed down due to tight railway transportation.
Despite supply disruptions, the pressure on supply from demand is not severe due to factors such as raw material costs and environmental policies. Most downstream copper semis processing enterprises have reduced or stopped production during the current consumption off-season. It is expected that the refined copper social inventory in China will be difficult to accumulate around New Year's Day.
Copper scrap
The blizzard has not affected the production of copper scrap smelters in Henan and Hebei but resulted in less efficient transportation of raw materials and finished products. According to the weather forecast, the overall impact is expected to gradually ease this week. The raw material inventory of local smelters and downstream enterprises can still support production and has not been depleted. Meanwhile, with the arrival of the traditional off-season for consumption, the supply and demand of copper scrap in northern China will further weaken, and some traders will engage in passive winter storage.
Copper rod
The raw material supply and finished product delivery of Chinese copper rod processing enterprises have both been affected by large-scale snowfall. Some processing enterprises were forced to stop production due to the insufficient supply of copper scrap raw materials. The closure of several highways in Hebei and the harsh driving conditions on national roads led to the slow driving of trucks, making it difficult for local copper rod processing enterprises to replenish raw materials in time. Most processing enterprises reported that their raw material inventory was only enough to maintain the operation of 2-3 production lines. As of December 21, the snowfall in northern China has basically ended. With the weakening of the cold wave and its shift to southern China, the operation of the copper rod industry in northern China is gradually recovering.
Copper strip and foil
The logistics transportation of copper strip processing enterprises in Shandong and Henan, including the transportation of raw materials and finished products, has been more significantly affected by the blizzard. However, production was largely unaffected, with only potential inventory risks, and all employees worked as usual.
A 6.2 magnitude earthquake occurred in Gansu on December 18, affecting the production and shipping of some copper strip and foil processing enterprises in Gansu and Qinghai. On the one hand, the safety of their factories and personnel was threatened. On the other hand, some local transportation routes were interrupted, forcing products to be transported back to the factory.
However, overall, the obstacles posed by blizzards and earthquakes to industrial operations were not very serious. The main factor contributing to the recent decline in operating rates is weak market consumption. The new energy vehicle and consumer electronics markets do not improve in demand at the end of the year and are still constrained by high costs. Therefore, it is expected that the supply of domestic copper strip and foil processing enterprises will still be stronger than demand in the short term.
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com