At 5 a.m. on September 28th, Peng Jin, a purchasing agent from a recycled copper processing enterprise in Taizhou, Zhejiang Province, stepped into the raw material yard with dew on his shoes, and the beam of his flashlight swept through the 30 tons of scrap copper wire. "This is the goods we 'grabbed' from three recycling merchants last night. Just unloaded from the truck, it can last until the third day of the National Day holiday." As he counted, he called downstream customers back, and the urgent voice on the receiver came from the phone, while on the other end of the phone, the supplier's quotations were being updated every hour.
During the National Day holiday, the copper wire raw material market is experiencing a rare "heat-cold differentiation": The machinery in the recycled copper processing workshop is running non-stop, and enterprises are willing to pay high prices to seize the materials to secure orders; while the production area of the refined copper rod is completely silent, with more than half of the equipment shut down for maintenance, and the inventory has accumulated to twice the normal level. Behind this differentiation lies the cost game after the copper price exceeded 83,000 yuan per ton, and the structural collision between the demand of new energy and traditional industries.
"Receiving over 50 calls every day, half of them are for demanding goods and the other half are for bargaining, my voice has long become hoarse." One of the purchasing agents spent the first three days of the National Day holiday on raw material procurement. On September 25th, the Grasberg copper mine accident in Indonesia triggered a global copper price surge, and the domestic recycled copper quotations jumped by 1,200 yuan per ton per day. He had to increase the purchase budget by 8% to obtain the key raw materials from surrounding county merchants.
This "copper material acquisition wave" has become a norm in the recycled copper gathering area. A survey conducted by Mysteel before the holiday showed that the raw material reserve of leading enterprises in Hubei and Sichuan generally exceeded 1,000 tons, and a recycled copper rod enterprise in Yingtan, Jiangxi Province even prepared 1,500 tons of recycled copper to ensure that three production lines did not stop working during the National Day holiday. "Customer orders extend to the end of October, and a day without raw materials means a penalty for breach of contract. Even if it's expensive, we still have to buy it." The production supervisor of this enterprise, Zhang Hanzhong, saw the numbers of raw material costs, capital interest, and order profits repeatedly fluctuating on his calculator.
The quality control process after the raw materials enter the warehouse is also not relaxed. In the workshop of a lithium-ion copper foil supplier in Zhejiang Province, quality inspectors are using handheld X-ray fluorescence spectrometers to test the purity of the raw materials. "New energy customers require a copper content of over 99.99%, and the impurities of iron and nickel must not exceed 0.005%." Director Li Mei of the quality control department pointed to the spectral curve on the screen and explained, "Every batch of raw materials received during the National Day holiday needs to be rechecked three times, and if it isdisqualification, it will be directly returned. Now the raw materials are precious, and any mistake cannot be tolerated."
The high raw material costs force enterprises to be meticulous in their calculations. Zhang Hanzhong disclosed that their production during the National Day holiday was like a precise cost accounting: "The recycled copper reserve should be maintained at a safe level of 600-750 tons. One more day of stockpiling will cost an additional 10,000 yuan in capital interest, and one ton less may lead to supply disruption." Even so, the enterprise's production rate during the National Day holiday reached 90%, much higher than the 60% of the same period in previous years.
Contrasting sharply with the busy recycled copper enterprises is the quiet factory of a refined copper rod enterprise in Wuxi, Jiangsu Province. On October 3rd, only a few workers were doing anti-corrosion treatment for the continuous casting and continuous rolling equipment in the workshop, and the production line originally used for producing copper wire blanks was all shut down, and the trucks at the finished product warehouse were few.
"This is the first time in three years that the National Day is completely shut down for maintenance. We just can't hold out anymore." The director of the comprehensive office of the enterprise told the reporter: "The current refined copper price is 83,200 yuan per ton, and the 2,000 tons of inventory in the factory occupies over 160 million yuan in funds, and the daily financial cost will lose nearly 10,000 yuan." The more challenging aspect is the weak downstream demand. "Our main customers are wire and cable factories. Their orders have decreased by 30% year-on-year. During the National Day holiday, we only operated at 40% capacity. Our goods simply couldn't be delivered."
Inventory accumulation has become a common predicament for copper smelting enterprises. According to SMM research, during the National Day holiday, domestic copper rod enterprises typically took a 4.05-day break, which was 0.1 days longer than in 2023. Some enterprises in the North China region even took a 7-day break. "Dealers continued to pressure the price, and the downstream was reluctant to stock up. The inventory turnover days extended from 7 days to over 15 days." A vice general manager of a copper rod enterprise in the Yangtze River Delta confessed that choosing to conduct maintenance during the National Day holiday was a last resort. "During the peak season, production suspension incurs significant losses. Holiday shutdowns can at least save some electricity and labor costs."
The policy uncertainty further exacerbated the enterprises' cautious attitude. The tax rebate policies for recycled copper in Jiangxi and Zhejiang provinces were still under discussion. Some copper smelting enterprises in the region were worried about losing their cost advantages in the future and simply suspended raw material purchases. "Buying refined copper now is like gambling. If the price drops after the holiday, the inventory will become a hot potato," Liu Min said.
The core of this "ice and fire test" is the structural change in the demand side. In a lithium battery copper foil factory in Ningbo, Zhejiang Province, 80% of the production lines remained operational during the National Day holiday. Trucks transported copper foil at a 15% higher freight rate than usual to 800 kilometers away battery factories. "In previous years, we would stop at least half of the equipment during the National Day holiday. This year, we could only stop 20%. The customers were pressuring us." The production director Chen Feng said. In the first eight months of 2024, domestic lithium battery copper foil production increased by 23.7% year-on-year. The explosive growth of new energy orders made them dare not relax at all.
The vigorous demand in the new energy industry is driving the purchase of high-end recycled copper wire raw materials. According to the data of the China Nonferrous Metals Industry Association, the proportion of recycled copper in the copper used for new energy vehicles has reached 35% in 2024. The demand for high-purity recycled copper rods has surged for motors and charging systems. "Our recycled copper wire purity can be stable at over 99.95%. After spectral analysis and tensile tests, it is directly supplied to new energy vehicle manufacturers." Zhang Hanzhong's company recently added two high-purity copper wire production lines and was still working on them during the National Day holiday.
However, the weakness in the traditional wire and cable industry has kept the demand for refined copper persistently low. A purchasing manager of an electrical wire and cable enterprise in Guangdong Province confirmed that they significantly reduced the purchase of refined copper rods during the National Day holiday: "The copper price is too high. Customers are waiting and observing. We dare not stock raw materials. Just purchase as needed." This cautious mindset was passed on to the upstream, resulting in the raw material inventory rate of copper rod enterprises being less than 30%.
On October 10th, the first working day after the National Day holiday ended, Peng Jin set off on a purchasing trip again. Although the copper price slightly dropped to 8.25 ten thousand yuan per ton, his purchase list had added 50 tons of demand. "The orders from downstream new energy customers are scheduled until November. Raw materials must keep up." While Liu Min's enterprise was busy promoting its inventory, "We are willing to offer a 5% discount. As long as we can turn over the inventory, we are willing to do so."
Mysteel analyst Wang Hao believes that this divergent pattern may continue until the fourth quarter: "The demand for high-purity copper wire from the new energy industry will continue to rise, while the demand recovery in traditional industries will still take time." For enterprises, their raw material strategies are undergoing reconfiguration - recycled copper enterprises pay more attention to supply chain stability, while copper smelting enterprises are seeking a balance between inventory and orders. In Liu Ming's computer, the latest market report has a red line marked: "Keep a close eye on policy changes. Wait until the inventory drops below 1,000 tons before restarting raw material purchases."
This "cold-hot test" in the copper wire raw material market may just be the beginning.
