SHANGHAI, Oct 28 (SMM) – China has issued documents recently to control the coal market. The prices of thermal coal, coke and coking coal fell to a one-month low, triggering significant pessimism in the metal market. Metals futures contracts and industrial commodities fell across the board. The most active SHFE copper contract fell below the 70,000 yuan/mt level. The spot prices of SMM #1 copper cathode have also fallen for five consecutive days. As of October 28, the spot prices have fallen by 4,420 yuan/mt, and the average price stood at 70,760 yuan/mt.
How did orders at copper semis producers change amid this round of price drop as well as the surge in the copper prices in early October and intensified power rationing?
Copper rod: In early October, some small and medium-sized wire and cable factories in Jiangsu were still affected by power rationing. And the resulting low operating rates have weakened the demand for copper rod. The high copper prices and the power rationing also weakened the demand for copper rod from enamelled wire producers. A wait and see sentiment combined with a bigger price spread between copper cathode and copper scrap significantly reduced new orders at copper cathode rod plants. After the copper price fell below 71,000 yuan/mt at the end of the month, new orders have increased, but failed to return to the pre-holiday level.
Wires and cables: In early October, cable companies in Jiangsu, Zhejiang and Shandong kept raw material inventories at low levels due to low operating rates driven by the power rationing and the surge in SHFE copper prices post holiday. And finished product inventory accumulated noticeably. After the copper prices fell below 71,000 yuan/mt, the acceptance by end-user industries improved, increasing orders placed. Apart from the increase in engineering installation orders from real estate, power companies and factory construction, retail orders also increased slightly. However, cable companies in Zhejiang and Shandong are still troubled by the power rationing, which resulted in lower output and delays in deliveries.
The demand has picked up slightly amid lower copper prices. But the processing fees of copper wires and copper rods as well as the prices of insulating materials like silicone rubber have risen to varying degrees due to the power rationing and production restrictions. The sharp increase in the cost at wire and cable companies led to significant cash flow issues, which forced those companies to reject some orders with a long account period and risk of payment.
Enamelled wire: Severe power rationing was implemented in Jiangsu and Zhejiang in October, affecting downstream motor companies. The demand for enamelled wires was greatly reduced due to low production. And new orders for enamelled wire companies decreased significantly. After the National Day holidays, the surge in the copper prices once again had an impact on enamelled wire orders. The price gains sidelined downstream producers and depressed the production enthusiasm.
Although the prices of copper dropped at the end of the month, the number of orders placed by downstream customers has not completely returned to normal levels. Production restrictions and shutdowns of enterprises in Zhejiang amid the continued power rationing still had a big impact on enamelled wire companies.
In addition, the prices of insulating paint rose sharply in October. And the prices of electricity have also risen to varying degrees under the control of national policies. The cost of raw materials and production costs of enterprises are constantly squeezing profit margins, but the fierce competition in the industry could hardly pass onto the processing fees.
![구리 가격이 계속 상승했고, 시장 관망세가 짙었으며, 현물 프리미엄이 하락했다 [SMM 화남 전해동 현물 주간 리뷰]](https://imgqn.smm.cn/usercenter/HhNHP20251217171708.jpg)
