Toward the end of May, copper rod prices moved differently across Asia. Prices rose in South Korea, while they held steady in China, mainly due to tight supply of raw materials.

South Korea

In the last week of May, Copper rod prices in South Korea witnessed a slight gain of 0.9%, continuing the trend from mid – April. This slight rise in price stemmed as a result of raw material shortages and steady demand.

The dwindling supply of copper rod can be attributed to several factors. Raw copper inventories in South Korean LME warehouses continued to fall, dropping 9.3% week-over-week to 41,025 metric tons by May 29. This reduction in available raw material directly limits the amount of copper that can be drawn into copper rod.

Furthermore, a historic six-month period of negative copper concentrate treatment charges (TCs) has no end in sight. Negative TCs mean smelters are paying to process concentrate, indicating a severe shortage of the primary raw material required for refined copper, and by extension, copper rod production.

Demand for copper rods remains strong, driven by ongoing procurement from the electronics and electrical sector. This demand is further bolstered by new developments in South Korea, including the start of construction for the 13.5 MW Hajang 5 Wind Power project by Soutjh Holdings Corporation and the Ministry of Trade, Industry and Energy's upcoming competitive solicitation for battery storage capacity. South Korea's ambitious renewable energy targets of 55.7 GW solar PV and 18.3 GW wind power, alongside plans to enhance grid capacity, will likely continue to fuel the need for copper rods.

China

Chinese copper prices remained stable in the week ending May 30^th. Notably, the operating rate of major domestic copper rod enterprises saw a significant weekly increase of 5.27 percentage points, reaching 75.90%. However, downstream companies adopted a cautious "wait-and-see" approach, leading to a weaker performance in new orders for copper rod enterprises compared to the previous week.

While secondary copper rod enterprises report better access to raw materials and more willing suppliers, they haven't ramped up their purchasing. However, these enterprises continue to implement 'buy as needed' strategy rather than building inventories. Sluggish demand for finished copper rod products, driven by weak end-use consumption, is severely impacting enterprise profit margins.

Copper rod prices are anticipated to rise in the short term. While only one smelter has scheduled maintenance in June, a notable increase in the number of companies reporting reduced capacity utilization is expected. This suggests that overall production in June will likely be lower than in May.