SHANGHAI, July 26 (SMM) - A recent SMM survey of 20 major domestic copper tube or pipe producers (total capacity: 1.152 million mt) revealed the following insights:
1) Operating Rates Drop Significantly in July
Based on the SMM survey, the average operating rate at the 20 copper tube or pipe producers was 74.2% in July, down both on a monthly and yearly basis. SMM surveyed those producers as to how long the seasonal low demand period will last this year and what would be the impact on consumption. According to the survey, 55% of producers expect the low demand period to last from early July to end October. Another 20% told SMM that demand has not fallen significantly in July, and the true negative impact will become more evident in August, and that the low demand period will last from early August to end October. The remaining 25% of producers are unclear as to how long the low demand period will last. In addition, almost 40% of producers predict demand for copper tube or pipe will drop 10-20% during the low demand period, 20% of producers expects demand to fall 20%-30%, 10% of producers believe consumption will contract 30-40%, and the remaining 30% of producers are unclear about the amount demand will contract.
2) Raw Material Inventories Flat
The SMM survey also shows that raw material inventories at the 20 surveyed producers in July were 17.4% of consumption, down only 0.3% from June levels of 17.7%. The negligible change in raw material inventories suggest copper tube and pipe producers are unwilling to take any financial risk in replenishing goods during the low demand period, even at low prices.
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