SHANGHAI, Mar 11 (SMM) — Operating rates at aluminium wire and cable producers in February was around 26.63%, a drop of 3.26 percentage points month on month but an increase of 10.48 percentage points year on year.
In February, most domestic wire and cable companies took a holiday on February 8, and resumed work on February 18. Northern companies did not even resume work until the end of February. The overall production time was reduced, the industry output declined, and even some small and medium-sized enterprises had few orders due to soaring raw materials price and postponed the date of resumption of work facing financial pressure. The wire and cable downstream could not afford high raw material prices, leading to limited new orders. At present, leading companies have relatively saturated orders, and their production schedules are looser than in previous years. Small and medium-sized enterprises have not shown a significant improvement in their output in February, and companies have more production to deliver orders before the CNY. Most of the wire and cable companies’ orders refer to the average aluminium prices of the previous month to sign the current month’s order contract. As the State Grid's orders are mostly concentrated at the end of March and the company’s production schedule is loose with insufficient raw material stocks before the CNY, the companies that signed orders and delivery made some losses. At present, wire and cable companies mostly wait and see the raw material market, and mainly restock at low prices.
With the resumption of work on construction sites in the north as the weather turns warmer, cable demand increases, which is good for the recovery of wire and cable operating rates. Domestic aluminium prices fluctuated, and the macro and fundamentals were resonating. Aluminuim prices were unlikely to rebound sharply. Downstream wire and cable factories passively accept high-priced raw materials, and their restocking enthusiasm will increase. SMM combines with the cable companies' orders in hand, and expects the operating rate of aluminium wire and cable companies to rebound by nearly 9 percentage points in March to about 35.49%.
