Metals News
[Cu] CBI Survey
data analysis
Dec 7,2009

SHANGHAI, Dec. 30 (CBI China) -- A recent CBI survey of 19 major domestic medium-and-large-scaled copper rod and wire producers (total capacity: 1.905 million mt/yr; monthly output: 159 kt at full operating rates) revealed the following insights: 

    1) Producers Run at 55.0% in December 
    According to the CBI survey, the average operating rate at the 19 producers during December was 55.0%, down 5.6% MoM, and down 20% YoY. Operating rates at large-size producers remained stable, while operating rates at medium-small sized producers fell due to suspended production. A number of copper rod and wire producers said copper cable producers received orders recently, but the production suspensions at small-size producers was the major factor behind the rising operating rates at large-size smelters. In addition, operating rates at copper rod producers with scrap copper as raw material fell due to limited supply.

    2) Inventories 
    The survey revealed that the 19 producers reduced raw material inventories from the previous month’s level.  Raw material inventories accounted for 7.6% of monthly copper consumption, down 2% MoM.  Finished goods inventories accounted for 12.2%, up 4.8% MoM.  In general, downstream manufacturers were cautious and lowered inventories of their raw materials in turn. Most said they would be more cautious about purchases for inventory before the New Year holiday, since prices are expected to fall afterwards. Finished goods inventories increased, but were still at low levels.

    3) Forecast for January Orders
    According to the survey, 60% of producers believed the orders during January would decline, for the construction of projects will slow down as Chinese New Year approaches, and the winter is traditional off-peak season for copper cable industry. 20% of producers believed the January orders would be flat at December levels, for the operating rates at copper cable producers remained high and their demand for copper rod and wire will also remain stable. 15% of producers were uncertain about the January orders. The remaining 5% believed the orders during January were likely to rise due to the activity of the downstream.

    4) Forecast for January Prices
    According to the survey, 90% of surveyed producers believed the copper prices would decline further, and they believed that the continuous increases in LME copper inventories indicated the declines in consumption. The domestic demand for copper was weak, copper prices may fall to RMB 20000/mt before Chinese New Year. 5% of producers believed copper prices would fluctuate around RMB 25000/mt. The remaining 5% were uncertain about the copper prices and believed that the uncertainty of economic trend led to the uncertainty of copper prices trend.


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