Introduction: Kuang Zixi, senior analyst of SMM copper industry, presented the report "2019-2020 development prospect of China's copper bar industry" on the 2019 China Copper Industry Chain Summit and copper bar industry summit forum for readers.
1. Basic information of copper bar industry chain
The industrial chain of copper bar industry is divided into raw material end, processing end and consumption end.
The raw material end mainly uses waste copper and electrolytic copper. Since most copper rods are processed by alloy, there are other metal elements involved, mainly brass rods processed by common copper zinc alloy, bronze rods containing tin and lead alloys, white copper rods containing nickel, etc.
The processing end processes raw materials to form bar profiles of different specifications and sells them to downstream dealers or terminal industries, mainly in construction, transportation, power, electronics and household appliances.
According to the survey, the national copper bar production capacity is about 3 million tons. At present, the average capacity utilization rate of national copper bar enterprises is about 80%.
2. Copper bars account for 12% of the output of various copper materials
As copper bars are widely used in various terminal industries, they play an important role in the copper processing industry. According to SMM data, in 2018, China's output of copper processing materials was 17.81 million tons, and the output of copper bars accounted for 12% of the total output of copper materials. Especially in recent years, due to the impact of macroeconomic downturn, the market has paid more and more attention to the situation of copper processing end, especially for regeneration enterprises supported by the government, when the supply of waste market has shrunk sharply this year, The operation of copper bar enterprises provides important information for the market.
3. Distribution of copper bar industry in China
China's copper bar production capacity is mainly distributed in coastal areas
As the world's largest producer and consumer of copper processed products, China's production and consumption of copper processed products are mainly concentrated in East and South China. East China is mainly dominated by Zhejiang, Anhui and Jiangsu, especially Zhejiang. The advantage of industrial concentration makes it the largest copper bar production province in China. Its production capacity accounts for about 50% of the national copper bar production capacity. Large enterprises with a production capacity of more than 100000 tons are more concentrated, such as Jintian, Bowei, Keyu, etc. There are more than 20 enterprises with a production capacity of 10000 tons to 100000 tons. In addition, the industrial competition also promotes the further optimization of the industrial structure, which makes many high-precision end bar mills develop better. South China is represented by Guangdong. As the copper bar processing is mainly medium and low-end products, which are mainly consumed in plumbing and sanitary ware, hardware, electronics and other industries, Guangdong Province has great potential in copper bar demand due to the advantages of sanitary ware and household products industrial clusters such as Foshan, Zhongshan and Jiangmen, so it has attracted some bar enterprises to set up factories locally. Copper bar enterprises in Guangdong are small and medium-sized, such as Guangdong Weiqiang copper, Foshan Guodong copper, Foshan Nanhai Yixing copper, Guangdong zhongnantian copper, Heshan Jinzhou copper, etc.
In addition, supported by the government's policy on renewable resources, Jiangxi is also one of the major copper bar production provinces. In addition to the 30% tax rebate stipulated by the state, waste enterprises in Jiangxi Province also stipulate that if enterprises use recycled raw materials accounting for more than 70%, they can enjoy another 40% tax rebate. At present, the ticket after tax rebate is lower than the market ticket, so the waste processing enterprises in Jiangxi Province have more price competitive advantages. Therefore, the policy advantages also attract copper processing enterprises from other provinces to build factories locally.
4. Waste copper is the main raw material for copper bar production
The copper processing industry mainly relies on earning processing fees and the added value of some products as the source of profit. The rise of copper price has little impact on the profits of the industry, but it will have a certain impact on the cost composition and working capital demand of copper processing enterprises. In addition to the copper smelting industry, renewable copper resources are also an important source of raw materials. The source and quality of recycled copper will directly affect the quality and production cost of copper rod and wire products. For example, in order to ensure product quality and performance stability, the company's main products take electrolytic copper, red copper and crude copper ingots as raw materials.
Due to the influence of terminal demand, most copper bar enterprises are committed to the production of medium and low-end products, so it is particularly important for enterprises to control the cost of raw materials. Scrap copper is favored by bar and alloy enterprises because of its low cost and government support. The utilization of scrap copper by domestic copper rod enterprises reaches more than 60%, and as China is the largest country in copper consumption, there is a large gap between domestic supply and demand, part of the demand for scrap copper needs to rely on import, and the imported scrap copper also has a certain price advantage over domestic scrap copper.
This year, due to the strict control on the import of waste materials in China, and the impact of the low price of electrolytic copper on the price difference of refined waste, a large gap has not been opened. The phenomenon of hoarding and reluctant sale of domestic waste copper holders is common. Affected by the increase of production costs, even if some provinces and cities have waste tax rebate policies, the increasing production pressure of enterprises also makes the growth rate of bar supply decline in recent years. Due to the impact of waste copper reduction, some waste enterprises have to turn their attention to crude copper ingots with slight price advantage. Other enterprises also have long-term strategies to consider building scrap copper dismantling plants overseas to alleviate the current embarrassing situation of shortage of raw materials.