Copper Rod Prices Drop in China and U.S. Amid Weak Demand and Eased Supply Chain

In the second week of October, Copper Rod prices declined in China and the US. While prices in China depleted due to falling consumer interest from the downstream industries after National Day holiday, prices in the US fell as freight rates decreased and FED’s rate cut effects on commodities waned.

China's Copper Rod market registered a 0.4% price decline following the National Day holiday period. The market is currently grappling with increased inventory levels, primarily due to reduced consumption as downstream enterprises temporarily halted operations during the holiday week. The situation is further complicated by slower-than-anticipated consumption of downstream raw material inventories, which was triggered by pre-holiday high copper prices. The accumulation of imported Copper Rod during the week, combined with sluggish growth in new downstream orders, has created downward pressure on spot premiums. A particularly telling indicator of market weakness is the near-zero processing fees reported by Chinese copper smelters, suggesting an oversupply of refined copper in the market.

In the United States, Copper Rod prices experienced a more pronounced decline of 0.6%. This downturn in Copper Rod prices can be attributed to several factors, including significant macroeconomic developments and improving supply chain conditions. The recent release of non-farm payrolls data has diminished expectations for aggressive Federal Reserve interest rate cuts, leading to a strengthened US dollar index and consequently putting downward pressure on Copper Rod prices. The market has notably scaled back predictions of a 50-basis-point interest rate cut within the year.

The global copper market has seen some relief in terms of logistics costs, with freight prices declining notably. The brief three-day US East Coast port strike in early October caused initial concern but was quickly resolved, helping to ease supply chain anxieties. The post-Chinese Golden Week period has witnessed a further reduction in freight rates, primarily due to excess capacity in the shipping industry and fewer omitted sailings.

The current market conditions point to persistent challenges in demand recovery, particularly in China, where post-holiday restocking has been slower than expected. The combination of high inventory levels, weak downstream demand, and macroeconomic headwinds suggests continued pressure on Copper Rod prices this week. However, industry experts maintain a positive outlook on the future of the Copper Rod market. This optimism is largely driven by the expected demand surge due to China's economic stimulus measures and anticipated additional rate reductions by the Federal Reserve. ChemAnalyst forecasts that the Copper Rod market will experience rising prices soon, as demand escalates across various industries.