SHANGHAI, May 10 (SMM) -- A recent SMM survey of 19 domestic copper tube and pipe producers (total capacity: 1.128 million mt) revealed the following insights:
1) Operating Rates Remain High
According to a SMM survey, the average operating rate for the 19 copper tube and pipe producers was 79.0% in early May, up 1% from March levels. The producers told SMM that orders for May were strong, and some producers are operating at full capacity. Although the current seasonal peak demand period is coming to an end, operating rates are not expected to drop off significantly during in June. In general, performance in the copper tube and pipe sector is stronger than expected, due mainly to production for high demand air-conditioners and products for the construction sector.
2) Raw Material Inventories Fall
The SMM survey shows raw material inventories in early May are 12.5% of consumption, down from March levels, and due mainly to cautious purchasing as prices have fallen sharply. Most copper tube and pipe producers say they will continue to restrict purchase volumes until copper prices stabilize, and will not build large stocks this year due to volatile copper prices. In addition, credit tightening is also partially curbing the ability of some producers to purchase large volumes of raw materials.
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