Off-season weak demand combined with rising copper prices squeezing profits, the operating rates of brass billet producers continued to edge down [SMM Brass Billet Market Weekly Review]

This week (7.31–8.06), the weekly operating rate of SMM’s sample brass billet enterprises was 48.68%, down 0.13 percentage points MoM and down 1.19 percentage points YoY, continuing the trend of edging down. The tight supply of recycled brass raw materials did not ease, and raw material prices remained elevated along with copper prices. Days of raw material inventories for the sample enterprises stood at 3.5 days, still at a low level, as enterprises remained cautious in their willingness to stockpile raw materials. The downstream traditional off-season persisted, with no significant improvement in end-use industry orders; only a mode of small-volume restocking on demand was maintained. The destocking pace for brass billet finished products was relatively slow, with days of finished product inventories for the sample enterprises at 5.04 days this week. Affected by the continued rise in copper prices, raw material costs for brass billet processing enterprises climbed, but product pass-through lagged, continuously squeezing enterprise profits and dampening production enthusiasm at most enterprises.

        Looking ahead to next week (8.07–8.13), the off-season market is difficult to reverse quickly, and a recovery in substantive downstream orders still lacks drivers. Meanwhile, with copper prices fluctuating at highs, the tight supply of recycled brass raw materials is expected to persist, and high raw material costs will continue to squeeze enterprise profits and suppress production willingness. SMM expects the operating rate of the sample brass billet enterprises to edge down further to 48.58% next week.