SHANGHAI, June 1 (SMM) – A recent SMM survey of 19 domestic copper tube and pipe producers (total capacity: 1.108 million mt) revealed the following insights:
1) Operating Rates Increase Slightly
Based on the survey, the average operating rate at the 19 major domestic copper tube and pipe producers was 80.8% in June, up slightly from 79.0% in May. The seasonal low demand period for copper tube and pipe is during July and August when cooling-tube and air-conditioning tube producers generally experience significant declines in production. During the transition month of June, rates usually begin to fall. However, the high operating rates during June of this year was due to steady output at air-conditioner producers, who experienced no marked decline in demand. In addition, producers in the survey told SMM that operating rates in July will likely fall after the seasonal low demand period.
2) Raw Material Inventories Increase
The SMM survey also shows that raw material inventories were 17.7% of consumption in June, up from 12.5% in May. Despite a pessimistic outlook for copper prices, lower copper prices actually boosted purchasing interest, and together with high operating rates, kept demand for copper strong. In addition, producers replenished some goods ahead of the upcoming Chinese Dragon Boat Festival holiday in order to meet production needs.
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