SHANGHAI, Mar. 28 (SMM) – A recent SMM survey of 16 major domestic copper plate, sheet, strip and foil producers (total capacity: 811 kt/yr) revealed the following insights:
1) Operating Rates Up Slightly
According to the SMM survey, the average operating rate at the 16 producers was 58.2% in March, up 4.3% from February’s 53.9%. The improvement was less than producers’ expectations and a result of a number of reasons. Some end-users, especially producers of decoration products and hardware accessories, are using copper substitutes, reducing demand for copper. Other producers are also facing cash flow pressures, which is negatively affecting operating rates.
2) Raw Material Inventories Up
Based on the survey, raw material inventories were 36.2% of production in March, up 8% from February’s 28.5%. The significant increases in raw material inventories were due mainly to stock replenishment by producers when copper prices fell below RMB 70,000/mt. The surveyed producers also told SMM they were not interest in purchasing as copper prices returned to RMB 72,000-73,000/mt, choosing to consume existing inventories instead. The producers say they will purchases again if copper prices fall below RMB 70,000/mt.
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