Operating Rates in Enamelled Wire Industry Dropped to Less Than 50% in January, But May See Seasonal Recovery in February

SHANGHAI, Feb 15 (SMM) - The operating rates of enamelled wire producers averaged 48.32% in January, down 14.17 percentage points YoY and 18.59 percentage points MoM, SMM survey showed. The figure was 1.49 percentage points lower than expected. The average operating rates of large, medium-sized and small enterprises stood at 50.84%, 43.67%, and 44.67% respectively. Some small enamelled wire factories were shut down in early January for the CNY holidays, and did not re-open until February 1. Poor orders and the pandemic severely hit the overall operating rates in the enamelled wire industry in January. The home appliance industry still performed poorly. According to the ChinaIOL, the planned output of major air-conditioning companies stood at 8.41 million units in January, a drop of 22.9% MoM and 37.1% YoY. Following the year-end sales boom, the auto industry entered a trough in January. According to data from the China Passenger Car Association (CPCA), China’s output of passenger cars in the narrow senses stood at 1.35 million units in January, a decrease of 36% month-on-month and 33.9% year-on-year. As a result, orders for enamelled wire from the automotive industry fell significantly. Both domestic sales and exports of power tools declined, sending ripple effect across the enamelled wire industry. Orders from the power industry barely improved at the beginning of the year.

The average operating rate in the enamelled wire industry is expected to recover to 63.69% in February, up 15.37 percentage points month on month and 8.29 percentage points year on year. The recovery of operating rates will be mainly driven by seasonal factor. Most enamelled wire companies said that high copper prices and poor orders deterred end users from placing orders after the CNY holidays. The planned output of home appliance manufacturers increased on a MoM basis in February, but the growth lagged behind the increase after last year’s CNY holidays. There was limited increase in orders from industries such as automobiles, industrial motors and transformers. Most enterprises believe that the entire enameled wire industry will not fully recover until the beginning of March. Notes: SMM surveyed 45 producers with a total capacity of 1.91 million mt/year.