Demand in December Exceeded Expectations, Operating Rate of Enamelled Wire Industry Reached Second Highest Level of the Year [SMM Analysis]

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       According to SMM, the comprehensive operating rate of the enamelled wire industry in December was 72.46%, down 0.59 percentage points YoY and up 3.42 percentage points MoM. Specifically, the operating rate of large enterprises was 75.93%, medium-sized enterprises 66.34%, and small enterprises 69.91%.

       The operating rate of the enamelled wire industry in December recorded 72.46%, significantly exceeding expectations (SMM's early-month forecast for December was 68.14%). According to SMM, although downstream orders were partially reduced due to year-end settlements and capital control, robust downstream demand and active picking up of goods sustained the growth momentum of new orders from November, resulting in a better-than-expected operating rate. Additionally, copper prices stabilized in December, with the average price lower than in November, which stimulated downstream purchasing enthusiasm and drove the operating rate higher.

       From the perspective of end-use consumption, the home appliance sector, particularly the air conditioning industry, performed exceptionally well in December. The dual impact of the year-end consumption peak and the uncertainty of tariffs prompting early overseas orders led to continued export rush orders, which became a major driver for the increase in the operating rate of the enamelled wire industry. Furthermore, terminal demand related to power transformers and new energy also performed well, supporting orders for enamelled wire enterprises.  

       In December, the raw material inventory/output ratio of enamelled wire enterprises was 12.09%, down 0.88 percentage points MoM. The finished product inventory/output ratio was 30.82%, down 2.9 percentage points MoM. The raw material inventory of enamelled wire enterprises fluctuated normally, with most enterprises purchasing as needed. Additionally, active picking up of goods by downstream enterprises led to a certain decline in finished product inventories.

Data Source: Compiled by SMM Survey        

      The operating rate of the enamelled wire industry in January is expected to be 58.51%, down 13.95 percentage points MoM and 9.19 percentage points YoY.

       At the beginning of the month, some enamelled wire enterprises still had sufficient orders, with some even working overtime during the Chinese New Year holiday to meet production demands. However, as this year's Chinese New Year holiday comes earlier, some enterprises reported a decline in orders after New Year's Day. SMM also heard that some enterprises plan to cut production and take holidays starting January 15, which will significantly impact the operating rate in January. Additionally, environmental protection inspections in Huzhou due to weather conditions have also affected local enterprises' production. Compared to the same period last year, most enamelled wire enterprises operated normally without direct impact from the Chinese New Year holiday, resulting in a more pronounced YoY decline this year.