Slower year-end consumption lowers Dec operating rates across wire, cable plants

SHANGHAI, Dec 29 (SMM) – Operating rates across Chinese manufacturers of wire and cable averaged 83.01% in December, down 3.19 percentage points from a month ago and 2.29 percentage points from a year ago, SMM research found.

Slowed consumption across infrastructure and property in winter accounted for the lower rate. Higher output of home appliances grew demand for enamelled wire, but failed to buoy the overall operating rate. 

Data from the China Electricity Council showed that investment in power grid projects in January-November dropped 3.2% compared to a year earlier, to stand at 451.1 billion yuan. Though the year-to-date decline on a yearly basis narrowed from August, the investment cycle has yet to increase production across wire, cable producers. 

SMM research also showed that the raw material inventory to output ratio across wire and cable producers came in at 21.16% in December, down 0.76 percentage point from November. Plants tended to deplete existing stocks of raw materials as the year drew to a close. Cash flow issues and on-demand downstream purchases also kept them cautious in purchasing raw materials.

For January 2019, the average operating rate is expected to fall further by 4.1 percentage points month on month to 79.36% as poor weather conditions and the upcoming Chinese New Year holiday reduce demand. 

Some wire and cable manufacturers will suspend in the second half of January, SMM learned. 

SMM surveyed 23 major producers of wire and cable, covering capacity of 1.55 million mt. Expansions at a large mill grew capacity from the 1.53 million mt surveyed for November.