Market demand weakens, operating rate of copper wire and cable enterprises may have peaked [SMM Weekly Review of Wire and Cable Market]

         This week (5.16-5.22), the operating rate of SMM copper wire and cable enterprises was 82.34%, down 1.05 percentage points MoM and up 6.47 percentage points YoY, falling short of the expected operating rate by 1.64 percentage points. The operating rate of copper wire and cable enterprises failed to rise as expected this week, mainly due to the gradual weakening of growth in new orders and the gradual depletion of orders on hand, making it difficult for enterprises to achieve further production growth. From the perspective of end-use demand, the peak period for market demand release has temporarily passed, and the market has returned to calm. A major enterprise told SMM that as of now, although its copper consumption for production in May increased by approximately 6% YoY, the value of its new orders this month decreased by nearly 20% YoY, indicating weak growth in new orders. Consequently, the operating rate of copper wire and cable enterprises may decline in the future. By sector, only State Grid-related orders have shown relatively good performance, while orders for new energy power generation have decreased most significantly, with no optimistic performance observed in the civil and infrastructure sectors. In terms of inventory, raw material inventory was recorded at 17,700 mt this week, down 1.25% MoM, while finished product inventory was recorded at 19,140 mt, down 2.1% MoM. In addition to the weak growth in demand for copper wire and cable itself, the growth in orders for aluminum wire and cable has also squeezed the operating rate of copper wire and cable production. Under the influence of these two factors, SMM expects that the operating rate of copper wire and cable enterprises will decline by 1.36 percentage points MoM to 80.98% next week (5.23-5.29), which is still 5.05 percentage points higher than the same period last year.