Weakening Demand for Home Appliances, with Both Orders and Operating Rates Pulling Back [SMM Enamelled Wire Market Weekly Review]

This week (March 20–26), the operating rate of machinery in the enamelled wire industry fell short of expectations, down 0.2 percentage points WoW to 88.73%. According to SMM, although the lower center of copper prices at the beginning of the week briefly drove downstream order replenishment, prices of petroleum-based basic chemical raw materials such as styrene and propylene have surged recently, significantly pushing up the cost of engineering plastics for home appliances such as PP and ABS. Coupled with shrinking demand from the Middle East, air-conditioner manufacturers’ willingness to stockpile and produce weakened markedly, and some enterprises postponed March orders to April for goods pick-up. Weakening demand from the home appliance sector directly dragged down enamelled wire orders, and amid fluctuations in the center of copper prices, new orders fell 11.19 percentage points WoW this week, with enterprises generally concerned about the order outlook for April. On inventory, the downstream pace of picking up goods slowed down, and finished product inventories edged up to 7.47 days. The cost side was also under pressure. Driven by rising crude oil prices, insulating varnish prices rose by more than 20, leaving enamelled wire enterprises facing rising costs that were difficult to pass on to downstream customers. Although production was still maintained at a relatively high level on the back of existing orders, as new orders continue to weaken, the operating rate is also expected to pull back in tandem, and is expected to fall further to 87.87% next week.