High copper prices weighed on copper tube operating rates, a low season may come earlier

SHANGHAI, May 12 (SMM)—Operating rates at domestic copper tube producers stood at 89.41% in April, up 1.6 percentage points in the month and 4.99 percentage points on the year, according to an SMM survey of 22 producers with total capacity of 2.2 million mt/year. End users stocked actively for the upcoming peak season for refrigeration appliances. Air conditioner producers operated at high capacity in April, which boosted demand for copper tubes. Rising copper prices drove up production costs, and some small copper tube makers who had cash flow issues had to give up orders. And these orders flowed to medium and large-scale producers. Operating rates stood at about 90% across medium and large-scale producers in April, while at only 69.74% across small producers.

In April, the ratio of raw material inventory to total production came in at 11.08%, a decrease of 0.52 percentage point from the previous month. Hiking copper prices kept most of the copper processors cautious about restocking. 

SMM expects operating rates of copper tube producers to drop 3.96 percentage points on the month but gain 2.06 percentage points on the year to 85.45% in May. Rising raw materials have also put pressure on end users. Some large-scale copper tube producers told SMM that orders they have received in May shrank by more than 15% compared with April, and this year's low season may come earlier.