SHANGHAI, Dec. 27 (SMM) – A recent SMM survey of 16 major domestic copper tube/pipe producers (total capacity: 972 kt/yr) revealed the following insights:
1) Operating Rates Fall
According to the SMM survey, the average operating rate at the surveyed copper tube/pipe producers was 70.8% in December, down 6.4% from November’s 77.2%. Several reasons were behind the decline in operating rates. First, due to low downstream demand, the traditional low production period for copper tube/pipe producers is December. Second, continuous copper price gains is causing a strong wait-and-see attitude and keeping downstream orders low. Third, the recent self-imposed cooperative pact agreed by eight major domestic copper tube/pipe producers has had a negative effect on orders from air-conditioner producers.
2) Copper Tube/Pipe Exports Remain Low, Raw Material Inventories Grow
The survey shows copper tube/pipe exports from the surveyed producers were 7 kt in December, accounting for only 12% of output. Although the recent price ratio has increased profits from exports, overseas demand is low due to the Christmas holiday period. In addition, raw material inventories at the surveyed producers in December were 17.9% of production, down 3.4% from November’s 21.3%. Copper tube/pipe producers chose to reduce purchases of raw materials since copper prices continue to rise and due to tight cash flow pressure at the year-end.
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