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SMM Cu Survey: Operating Rates Continue to Fall at Domestic Copper Plate, Sheet, Strip and Foil Producers

iconNov 29, 2010 14:59
Source:SMM

SHANGHAI, Nov. 29 (SMM) - A recent SMM survey of 16 major domestic copper plate, sheet, strip and foil producers (total capacity:  800 kt) shows the following insights:
 
1) Operating Rates Continue to Fall
According to the survey, the average operating rate at the 16 copper plate, sheet, strip and foil producers was 52.5% in November, down from October’s 58.7%, and which was in line with lower orders predicted by most surveyed producers in the last edition of SMM survey of major domestic copper plate, sheet, strip and foil producers. 

SMM believes declines in operating rates are due largely to the following factors.  First, copper prices hovered above RMB 60,000/mt, depressing downstream demand.  Second, downstream producers were not actively building stocks with the approach of the year end.  Third, tight cash flow at the year’s end also served to weaken downstream demand.  Fourth, power restrictions are still in force in Jiangsu and Zhejiang provinces, and some regions in Anhui province have restricted local natural gas consumption, both actions negatively affected downstream demand.  Finally, operating rates at producers with capacities above 50 kt/yr were low due to trial production at many facilities, lowering the average rate for this category of producers.  The average operating rate at surveyed producers with capacity of above 50 kt/yr was 53.19% in November, compared to the other size producers where the rate was 59.41%.

2) Raw Material Inventories Edge Up
The survey also shows raw material inventories in November were 23.2% of consumption, or 6.96 days’ consumption, and up slightly from 6.78 days in October.  Higher raw material inventories at surveyed producers suggest copper plate, sheet, strip and foil producers increased purchase volumes as copper price fell in early November, but purchases were still considered modest.  In addition, weak end-user consumption also caused producers to limit stock building.  

 

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