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SMM Cu Survey: Operating Rates Fall Further in February at Major Domestic Wire and Cable Producers
Feb 28,2011 13:25CST
data analysis

SHANGHAI, Feb. 28 (SMM) - A recent SMM survey of 20 major domestic wire and cable producers (total capacity: 776 kt/yr) revealed the following insights:

1) Operating Rates Fall Further in February 
According to the survey, the average operating rate at the 20 producers was 52.1% in February, down 11.9% from January’s 64%.  Production suspensions or stoppages during the Chinese New Year holiday were the main reasons behind lower operating rates.  The surveyed producers report production will fully resume after the Lantern Festival on February 17th, and that only a limited number of producers continued to operate during the holiday.  Meanwhile, weak end-user demand also affected orders, while high copper prices also added to a wait-and-see attitude among downstream producers.  Since copper prices are expected to fall to around RMB 70,000/mt, downstream orders will begin to improve.   

2) Raw Material Inventories Flat 
Raw material inventories at the surveyed producers were 39.5% of production in February, flat with the 39.3% level in January.  The low operating rates resulted in low consumption of raw materials, but recent sharp price declines stimulated downstream purchasing interest.  Some producers believed copper prices would fall to RMB 70,000/mt, but previously high copper prices caused some producers to build stocks at current prices as a way to reduce future risk. 


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