Copper cathode rods: The cost of natural gas in the copper cathode rod industry accounts for 30-40% of the total production cost. Natural gas prices in Shandong, Jiangsu, Jiangxi and other places have increased since October, with the price gains between 40-60%/m3. The production cost per mt of output at enterprises will increase by 20-30 yuan/mt. This, together with the increase in the costs of labour, management and freight, raised the overall cost by 80-100 yuan/mt year-on-year.

According to SMM survey, a small number of copper rod plants’ processing fees were slightly raised by 10-20 yuan/mt in October, but the acceptance by downstream enamelled wire and cable plants was low. And the actual traded prices were not high. The processing fees of copper wire rose for only some small companies that lacked the negotiation power over pricing. For copper rod plants, the prices of long-term orders for copper cathode are likely to rise. Most copper cathode rod manufacturers plan to raise the annual processing fees under long-term contracts by 20-50 yuan/mt.

Copper plate/sheet and strip: The production process of copper plate/sheet and strip includes cold rolling and hot rolling. The cold rolling process only uses electricity, accounting for 20-25% of the production cost, while the hot rolling process mainly uses natural gas and a small amount of electricity, accounting for around 10% of the total cost. After the rise in electricity prices, the cost of per mt of cold-rolled plate/sheet and strip output rose 200-300 yuan/mt. The gains in natural gas prices raised the cost of hot-rolled plate/sheet and strip plants by 30-50 yuan/mt. As far as SMM understood, only a small number of copper plate/sheet and strip plants have raised the processing fees slightly for several downstream buyers, while most of the plants saw lower profits amid weaker orders from electronics, real estate and overseas markets.

Copper tube: The production cost of electricity in the copper tube industry accounts for around 30% of the total production cost. After the increase in electricity prices, the cost rose at most of the manufacturers. Large domestic copper tube plants have raised their processing fees by 200-300 yuan/mt. Due to the high market share of large companies, downstream industries were forced to accept the higher processing fees.

Copper foil: The cost of electricity accounts for around 40% of the total production cost in the copper cathode foil industry. Most copper foil plants said that the average electricity price of peak and off-peak periods this year has increased by 10-15% from the same period last year. The processing fees of copper foil plants are closely related to the downstream demand.

In the first half of the year, the demand was robust from the new energy and electronics industries, and the processing fees of copper foil plants have risen sharply. As the growth of downstream demand slowed in the third quarter, the processing fees of copper foil used in electronic circuits have not changed much. Lithium battery copper foil manufacturers have adjusted the processing fees for some battery companies that demanded customised width of foil.

Wire and cable: The cost of electricity in the wire and cable industry accounts for about 10-15% of the total production costs. The overall consolidation ratio of China’s wire and cable industry is low, and there is severe overcapacity. The processing fees remain at 10% of the total product prices all year round. Even if the cost of labour, materials, management and logistics rises sharply, it is difficult for the prices of wire and cable products to follow suit. As such, the profits at enterprises are eroded.

A series of issues occurred in the real estate industry this year, and the risk of capital default has increased. Most wire and cable companies are more cautious in accepting real estate orders, and refrain from accepting the orders from the real estate market with long periods and high risk of payment. Meanwhile, the demand in the real estate industry has weakened, which will also affect the operating rates of copper cathode rod plants.

Enamelled wire: The electricity consumption of the large enamelled wire plants using copper cathode to produce finished products accounts for 20-30% of the total production cost, while the electricity cost of enamelled wire plants that directly use copper wire accounts for a small proportion. As far as SMM understood, insulating varnish accounts for 40% of the total production cost, and the price volatility has a great impact on the production cost of enamelled wire. The prices of insulating varnish have risen substantially this year, but most companies in the enamelled wire industry have not hiked their prices in the face of the soaring prices of insulating varnish. The supply surplus and weaker demand have restricted the processing fees of enamelled wire from rising.