The operating rate of copper wire and cable enterprises declined as expected this week and is not expected to have hit bottom yet [SMM Analysis].

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       This week (12.20-12.26), the operating rate of SMM copper wire and cable enterprises was 82.32%, down 4.42 percentage points MoM, only 0.46 percentage points higher YoY, and merely 0.16 percentage points above the expected operating rate. This week, new orders and production of copper wire and cable enterprises declined as expected, with downstream demand showing seasonal weakness. Most enterprises shifted their focus to payment collection, although a few were still rushing to fulfill orders. Copper consumption rebounded this week, but these enterprises indicated that the consumption was mainly driven by previous orders on hand. Once these orders are completed and delivered, their copper consumption is expected to decline. By order type, medium- and low-voltage orders weakened significantly, while high-voltage orders still showed demand.

       This week, raw material inventories of sampled copper wire and cable enterprises increased by 2.29% MoM to 21,420 mt, while finished product inventories rose by 1.72% MoM to 17,130 mt. Some enterprises restocked at lower prices this week, leading to the growth in raw material inventories, while downstream picking up goods slowed, causing slight growth in finished product inventories for some enterprises.

       SMM expects the operating rate of copper wire and cable enterprises to continue declining next week (12.27-1.2), down 4.78 percentage points MoM to 77.53%. According to SMM, there is little chance of improvement in enterprise orders before the New Year, so the operating rate may continue to decline. A rebound in orders is possible after the New Year, but the extent will be limited. Recently, SMM also learned that only a few wire and cable enterprises maintained flat copper consumption YoY this year, while most enterprises saw a YoY decline of 5%-15% in copper consumption for 2024. For enterprises whose main orders are related to real estate and infrastructure, the YoY decline is likely to expand to 20%-35%.