SHANGHAI, Dec. 20 (SMM) - A recent SMM survey of 20 major domestic copper wire rod producers (total capacity: 3.27 million mt/yr) revealed the following insights:
1) Operating Rates Increase
According to the survey, the average operating rate at the surveyed producers was 68.88% in December, up 7.55% from November’s 61.33%, and the increase was due to three factors. First, price corrections in November stimulated downstream orders, helping improve operating rates at copper wire rod producers. Second, the price advantage of scrap copper was reduced with copper price corrections in November, boosting production at oxygen-free copper rod producers, especially producers with annual capacities above 100 kt/yr. According to the survey, operating rates at larger producers reached 71.05% in December. Third, the easing of power restrictions also helped producers increase operating rates.
2) Inventories of Raw Material and Finished Goods Both Down
The survey also revealed raw material inventories were 15.38% of consumption during December, down from November’s 17.33%. Copper wire rod producers were undertaking strict control of raw material inventories due to the need for cash flow at the end of the year. Rising copper prices also made producers cautious with regard to adding to stocks.
Based on the survey, the proportion of finished goods at surveyed producers was 13.13% in December, down slightly from November’s 13.52%. The surveyed producers also told SMM that tight cash flow at the year’s end was forcing them to reduce finished goods inventories, and the need for cash collection at end-users enterprises made finished goods inventories fall at a slower pace.
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