Copper rod prices across key Asian markets witnessed an increase in mid-February, driven by regional supply constraints and rising demand. China's gradual demand recovery, South Korea’s export surge, and Indonesia’s mining disruptions collectively fueled the upward trend, signaling potential volatility in the copper market ahead.

China's copper rod market saw a 1% price increase, driven by recovery of wire and cable enterprises in the southwest, where operating rates have already reached approximately 70%. This higher regional demand has directly impacted the flow of secondary copper rod within the country, leading to an increase in prices.

Despite some secondary copper rod enterprises resuming production post-Lantern Festival, challenges persist in securing affordable raw materials. Even with minor corrections in copper prices, suppliers are maintaining high prices for secondary copper, hindering the ability of enterprises to resume normal production quickly. This constraint has contributed to the slight upward pressure on copper rod prices.

The South Korean copper market witnessed upward momentum in mid-February, with copper rod prices increasing by 1% in the week ending February 14. This price surge correlated with a notable decline in copper inventories at the London Metal Exchange (LME) warehouse in Korea. Data revealed an 8% decrease in stock levels till February 12 compared to the previous week, indicating a potential tightening of supply amidst rising demand.

This upward pressure on copper rod prices was further amplified by South Korea's robust export performance in early February. Driven by strong global demand for locally produced semiconductors and automobiles, the nation's exports experienced an overall increase. Notably, semiconductor exports rose by 1.8%, while automotive shipments surged by 27.1% in the first ten days of the month. Additionally, exports of mobile devices and computers demonstrated double-digit growth, collectively contributing to increased demand for copper rod.

In the second week of February, Indonesian copper rod prices experienced a 1% increase, mirroring trends across Asia, driven in part by PT Freeport Indonesia's reduced copper ore mining output, now at 60%, due to ongoing repairs at its new smelter following an October fire. While Indonesia has granted Freeport-McMoRan an export permit extension for copper concentrates, it comes with higher export taxes as a penalty, a measure that, coupled with the rising raw material costs, is expected to further inflate copper rod prices within the country.

The Chinese government's new policy to constrain the blind expansion of copper smelters is expected to tighten supply discipline, potentially stabilizing copper rod prices in Asia. Rising demand from electric vehicles and potential easing of global ore shortages could further influence prices. However, challenges like Freeport-McMoRan's production drop and rising costs may exert upward pressure. Overall, copper rod prices in Asia are likely to experience moderate increases, balancing supply constraints with robust demand and market dynamics.