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1) Increases in Operating Rates Due to Recovery of Copper Prices
The average operating rate of the 15 copper plate, sheet and foil smelters was 47.9% during January, up 2% MoM, down 11.4% compared to the 61.3% rate in the same period last year.
In early January, copper price rebounded dramatically by over 22%, boosting confidence of previously cautious buyers, as well increasing orders from the end-consumers. Orders at the copper plate and sheet smelters will remain steady up to mid-February, leading to increases in operating rates.
2) Consumption of Raw Materials
Monthly copper consumption of the 15 smelters was 23.4 kt, with consumption of refined and scrap copper at 21.9 kt and 1.55 kt, respectively, a ratio at 14.1:1.
3) Inventories of Raw Materials
According to CBI’s survey, raw material inventories held by the 15 smelters accounted for 50.9% of monthly copper consumption, up 26.1% MoM. One of smelters, with capacity above 50 kt/yr and holding high inventories said, “at present, we make stock replenishment based on orders. As the Chinese New Year approaches, we received some orders for February. We will increase purchases for stock replenishment with the promise of hedges and orders due to tighter domestic copper supply.” The inventory data from this particular smelter increased the proportion of inventory reported in this survey to a large extent. The recovery of market sentiment, slight increases in orders, and the stock replenishment before Chinese New Year are the main reasons behind the overall increases in inventory.
4) Forecast of February Orders
According to the survey, 33% of smelters believed the orders would increase during February, for the operating rates at copper plate, sheet and foil downstream enterprises would recover after Chinese New Year, leading to the demand increases. 27% of smelters believed the orders would be flat at January levels, for their orders in January were better than their expectations, and thought this trend would continue after the holiday; 27% of smelters believed the orders would decline, for the present orders were mainly coming from the downstream enterprises who purchased for the production needs after the holiday and would have low interest in purchase after the holiday. The remaining 13% of smelters were uncertain about the orders during February.
5) Forecast of February Copper Price
According to the survey, due to the frequent fluctuations of copper price recently, copper plate, sheet and foil smelters had different views on the trend of copper price. 54% of smelters believed the copper price would maintain the current trend at RMB 30,000/mt due to limited room for rebound and declines. 33% of smelters believed the copper price would decline further, as there was no actual support for the rebound of copper price, once the news was absorbed by the market, the price would return back to the weak fundamentals. 13% of smelters were uncertain about the copper price trend. No smelters believed the copper price would increase.
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