SHANGHAI, Jan. 11 (SMM) -- A recent SMM survey of 17 medium and large-size copper plate, sheet, strip and foil producers (total capacity: 742 kt/yr) revealed the following insights:
1) Stable Operating Rates
According to a recent survey of 17 major domestic copper plate, sheet, strip and foil producers, overall operating rates at those producers was 59.2% in January, down 1.7% from November levels, but up 12.7% on a yearly basis. The 17 copper plate, sheet and strip producers say current downstream orders were stable, resulting in stable production. However, SMM believes operating rates in the industry will drop in February due to the Chinese New Year holiday.
2) Slight Declines in Raw Material Inventories
The survey showed raw material inventories at the 17 copper plate, sheet, strip and foil producers was 23.8% of consumption in January, down 3.7% compared with November. Declines in raw material inventories were due largely to copper smelter and trader unwillingness to move goods in view of constant price gains, but the producers told SMM they were making purchases on an as-needed basis. Some producers say they originally planned to build stocks when copper prices fell, but are now more cautious on fears of falling prices, given the recent surge in copper prices.
3) Scrap Copper Consumption Proportion Falls
The proportion of scrap copper used at copper plate, sheet, strip and foil producers declined. Cargo-holders of scrap copper were reluctant to sell, given rising copper prices, tightening market supply as a result. However, recent strong increases in prices are creating opportunities for higher profits. Moreover, scrap copper price increases have been less than refined copper, so it also has a greater price advantage. In this context, SMM predicts the proportion of scrap copper consumed at copper plate, sheet, strip and foil producers will increase in the future.
4) February Orders Expected to Remain Stable
According to the survey, copper plate, sheet, strip and foil producers were slightly pessimistic towards orders in February.
As many as 71% of producers believe orders for February will remain flat with January levels, while the remaining 29% feel will drop.
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