SHANGHAI, Aug. 22 (SMM) –A recent SMM survey of 20 major domestic copper plate, sheet, strip and foil producers (total capacity: 907 kt/yr) revealed the following insights:
1) Operating Rates Continued to Fall in July
As SMM predicted in earlier reports, the average operating rate at the 20 major domestic copper plate, sheet, strip and foil producers fell again in July, dropping 2.2% to hit 59.6%, down from June’s 61.8% and largely due to the seasonal low demand period and higher copper prices. According to the National Bureau of Statistics (NBS), China’s industrial added value growth rate during July was down 7.3% MoM, suggesting a slowdown in all production sectors, including lower demand for copper plates, sheets, strips and foils. Based on the SMM survey results, the drop in demand for automobile plates (strips) and electronic strips was especially sharp. In addition, spot copper prices had long remained high and within the RMB 71,000-72,000/mt range during July, which dampened demand and forced copper plate, sheet, strip and foil producers to lower operating rates.
2) Raw Material Inventories Up
Raw material inventories during July at the 20 surveyed producers were 29% of production, up nearly 6% from June. Since the SMM survey was conducted after significant copper price declines, the surveyed producers all planned to make more purchases. In addition, some restocking activity following the price decline was a sign that cash flows at copper plate, sheet, strip and foil producers had eased slightly in early August. However, since producers in the survey are not optimistic towards August orders, raw material inventories will not likely grow in the foreseeable future.