SHANGHAI, Apr 19 (SMM) - China copper semis output is estimated at 1.95 million mt in March, up 11.17% month-on-month and 2.48% year-on-year, according to SMM research. Operating rates at copper semis producers averaged at 76.65% in March, up 12.02 percentage points month on month and 6.64 percentage points year on year.
The average operating rate of the copper industry in March rebounded as expected and significantly exceeded expectations. The copper tube enterprises contributed the major increase as their operating rates were significantly drove up by the increasing downstream demand amid sharp price cut of copper. The operating rates picked up across most copper semis sectors, and the average operating rates of each sector were as follows: copper tube (90.29%)> copper plate/sheet and strip (77%) >copper cathode rod (73.77%).
In particular, many copper tube companies have indicated that their production has been scheduled until May thanks to the sharp increase in orders from the home appliance industry. Orders for copper plate/sheet recovered seasonally by 2.83%, and orders for copper cathode rod increased benefiting from the narrow price spread between copper cathode and copper scrap. In addition, some cable factories and engineering projects purchased actively on dips in March, which made the average operating rate of copper cathode rod enterprises rise 12.54 percentage points.
Overall, the domestic demand outperformed the overseas one. On the one hand, the overseas demand continued to fall in March, and the downward pace slowed down. The manufacturing PMI of the United States, Europe, and Japan in March were 49.3, 47.1, and 48.6 respectively. On the other hand, domestic demand continued to pick up, though the expansion pace has slowed down. In March, China's manufacturing PMI was 51.9, staying in the expansion range but was 0.7 point lower than that in February.
Looking into April, SMM believes that the copper semis sector will extend the weakness, with the average operating rate at 91.65% for copper tube sector, 75.2% for copper plate/sheet and strip sector, and 72.86% for copper cathode rod sector. The average operating rate across the copper semis industry is expected to fall 0.77 percentage point MoM to 75.88%, up 15.49 percentage points YoY. According to SMM forecast, only the operating rates of copper tube sector can remain high, while those of other sectors are expected to fall. The reason for the prediction of a sharp year-on-year increase is that the base figure was low as many factories in east China were forced to suspend production due to the pandemic outbreak in April last year.
