Weak Supply and Demand Suppressed Operating Rates in January; Chinese New Year Impact to Extend Downtrend in February

According to SMM data, the comprehensive operating rate for copper billet enterprises in January 2026 was 50.86%, down 1.89 percentage points MoM but up 9.17 percentage points YoY. The year-on-year improvement was due to the low base effect from the Chinese New Year holiday occurring in the same period last year. By enterprise size, the operating rate in January 2026 was 57.74% for large enterprises, 40.83% for medium-sized enterprises, and only 32.29% for small enterprises, which faced greater cost and order pressures.

In January, copper prices fluctuated at highs, generally increasing raw material procurement pressure. However, end-use industries such as valves and sanitary hardware were unable to raise prices in sync due to poor cost pass-through, leading to continued contraction in brass billet orders. As a result, since mid-to-late January, some small copper billet enterprises have chosen to take early holidays due to high costs and reduced orders. To mitigate market risks, companies widely adopted low-inventory strategies. Currently, the average raw material inventory of sampled enterprises is only 3.95 days, with finished product inventories around 6.77 days, reflecting overall weak stockpiling willingness.

Looking ahead to February, the supply side faces initial pressure: limited offers from overseas suppliers before the Chinese New Year have led to persistently tight supply of recycled brass raw materials, directly constraining enterprises' operating capacity. Demand remains weak as well, with orders from traditional sectors like sanitary hardware showing no signs of recovery. Enterprises are generally focusing on delivering existing orders, with limited new orders being taken. Additionally, high copper price volatility continues to suppress downstream stocking enthusiasm. The impact of the Chinese New Year holiday will also become apparent, as many large and medium-sized enterprises plan to suspend operations between February 7 and 12, significantly reducing effective production days. In summary, amid multiple factors including supply constraints, insufficient orders, the approaching holiday, and price fluctuations, SMM expects the comprehensive operating rate for copper billet enterprises in February to decrease sharply by 17.78 percentage points MoM to a low of 33.08%.