Operating Rates of Copper Semis Dropped to Varying Degrees in January

SHANGHAI, Feb 16 (SMM) -  China copper semis output stood at 1.63 million mt in January, down 21.1% month-on-month (MoM) and up 6.13% year-on-year (YoY), according to SMM research. The average operating rate of copper semis producers stood at 61.93% in January, down 12.95 percentage points MoM and 10.61 percentage points YoY.

The operating rates of the entire copper semis industry dropped in January partly because the CNY started earlier this year. In addition, as most migrant workers were not able to return to their hometown for two years, quite a number manufacturers closed early for the holiday. As far as SMM understands, most copper semis manufacturers kicked off the holiday season 5 days earlier than usual, which accounted for the drop in overall operating rates. Specifically speaking, the operating rates of copper tube sector dropped the least, while that of copper rod sector declined the most. The average operating rate of each industry has been as follows: copper tube (78.69%) > copper plate/sheet, strip and foil (70.11%) > copper cathode rod industry (56.25%). The copper tube sector was still in traditional high in January, hence the manufacturers took shorter holidays and maintained relatively high operating rates. Most copper rod manufacturers closed early for the CNY holiday dragged on by the gloomy real estate market. The operating rates of copper plate/sheet, strip, and foil sector dropped mainly because the orders from the electronics industry were just modest, while only the automobile connector sector brought sound orders. And an early CNY this year also partly contributed to the decline in the operating rates.

Overall, the performance of overseas demand in January was acceptable, although it dropped month-on-month slightly, the total demand was still high. In terms of domestic demand, it met the traditional low in January, and it has been normal that domestic demand shrank in the month. Domestic consumption kicked off the new lunar year with flat performance due to the resurging COVID-19 pandemic without many highlights. The market shall keep an eye on the following COVID prevent and control measures as well as the recovery of Chinese economy.

Looking into February, SMM believes that the copper semis sector will extend the landscape in January into February, with the average operating rate at 69.52% for copper tube sector, 64.1% for copper plate/sheet and strip sector, and 50.15% for copper cathode rod sector. The average operating rate in the overall copper semis industry is expected at 55.43% in February, down 6.5 percentage points MoM, but up 7.43 percentage points YoY. The sector will still be greatly contained by the holiday factor. The attention shall be paid to the launch of multiple infrastructure construction projects in China, and their contritions to the consumption of copper semis.