SHANGHAI, May 4 (SMM) -- A recent SMM survey of 18 major domestic copper wire rod producers (total capacity: 3.06 million mt) revealed the following insights:
1) Operating Rates Improve Further
According to the survey, the average operating rate at the 18 copper wire rod producers was 78.8% in April, up 6.3% from March levels, and up 4% from May 2009 levels, both of which were in line with a SMM survey of orders. Operating rates in April at large-size producers increased 6.7% on a monthly basis, and rates at small and medium-size producers also grew modestly. Although the survey showed increases in operating rates for April, enterprises also said overall demand growth for 2010 will not as strong as 2009. Downstream buying interest remains cautious with copper prices high. Orders to date for 1H 2010 were due largely to the Central Government's RMB 4 trillion stimulus package. Producers are worried that recent moves by the Central Government to control the overheating property market in China will negatively affect operating rates during 2H 2010.
2) Inventories of Raw Materials and Finished Products Stabilizing
The survey shows raw material inventories were 19.0% of consumption in April, down 2% on a monthly basis, and with the proportion of finished goods stocks at 12.1%. Most surveyed wire rod producers say they will continue to purchase goods on an as-needed basis, but remain flexible to take advantage as prices fluctuate.
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