What's the Status Quo for Copper Semis Processing Plants amid Intensified Power Rationing in Zhejiang and Shandong?

SHANGHAI, Oct 28 (SMM) – Copper semis processing enterprises across Jiangsu, Guangdong, Anhui and Guangxi have been significantly affected by the power rationing implemented in late September driven by the dual control policy on national energy consumption amid intensified contradiction between the supply and demand of electricity and coal. SMM has recently undertaken a survey on the production of some domestic copper semis processing enterprises. Generally speaking, the power rationing degree varies in different places, and the intensity of power rationing has intensified in some areas.

The most severely affected area in October was Zhejiang (where copper semis output accounts for 13%). After the National Day, the power rationing in Zhejiang became more severe. According to government requirements, companies implemented restrictions on total power consumption, staggered production as well as five-on two-off and two-on five-off shifts. According to the survey, electrical machinery factories, enamelled wire factories,= and copper rod factories have all been affected significantly , and enterprises are facing direct impacts such as backlogs of orders, delays in delivery and rising production costs.

After the National Day, the power rationing in Shandong (where copper semis output accounts for 3.8%) intensified , especially since the second half of the month. At present, copper semis processing enterprises across Yantai, Linyi, Dongying and Qingdao have been affected by power rationing. Those regions have implemented two-on five-off and three-on three-off shifts, which significantly affected the copper tube, copper busbar as well as copper wire and cable companies. At present, the output of most companies is affected by more than a half, in addition to a backlog of orders and delay in deliveries.

The power rationing in Henan (where copper semis output accounts for 3.9%) is also very serious recently. It is understood that the current power rationing is mainly aimed at the high energy consumption and high emissions projects. The emissions and energy consumption issues of the copper industry are not prominent compared to chemical and other non-ferrous metals industries. According to the survey, the main copper semis processing enterprises in Luoyang, Zhengzhou and Xinxiang have maintained normal production amid limited impact from the power rationing.

The power rationing in Jiangsu has eased (where copper output accounts for 17.5%). At the end of September, the copper rod, wire and cable companies in Changzhou and Yixing were significantly affected by the power rationing. And copper rod plants halted production for a week at one point. The power rationing has continued after the National Day holidays. It is understood that some areas are still implementing the policy in a strict manner, implementing three-on four-off and two-on five-off shifts. That has a greater impact on copper foil and cable companies. The power rationing has improved significantly after the second half of the month. Most copper rod companies can produce normally. And only a few copper rod factories remain closed.

 With the release of the adjustments to the transaction prices of coal-fired power generation, various regions are gradually cancelling the price of electricity sold in the industrial and commercial catalogue, which means a certain increase in the electricity prices. Most surveyed companies told us that the increase in electricity bills will not be less than 15%, and the prices of natural gas will also increase. In the face of rising electricity tariffs, rising natural gas prices and higher production costs caused by electricity rationing, copper semis processing companies will raise their processing fees. Copper tube companies have issued a price adjustment notice to increase the processing fee by 300 yuan/mt. And the copper rod enterprise in east China also said that they will increase the processing fee by 10-20 yuan/mt. As the downstream producers are unwilling to accept the increase in processing fees, the period for the transmission of prices is expected to be extended. It is difficult for upstream and downstream industries against higher production costs, high copper prices and limited profit.