SHANGHAI, Aug. 30 (SMM) –The latest SMM survey revealed about 50% copper wire rod producers expected September orders to be stable.
Around half of the 20 major domestic copper wire rod producers believed orders during September will have little changes. It's worth noticing that most of these producers said orders in August have improved due to promotion of electric power projects, and that orders are not likely to be significantly boosted by demand during September but will remain at current levels. Furthermore, some low-oxygen rod enterprises using scrap copper as raw materials told SMM that as the price gap between scrap and refined copper fell significantly following the latest round of copper price declines, some of them reported higher costs than oxygen-free rod enterprises using refined copper as raw materials. In this context, some wire and cable producers preferred to choose oxygen-free rods, and the phenomenon was particularly obvious in north China, causing a drop in August low-oxygen rod orders, which will continue to fall for some time based on current copper price trends.
About 30% producers in the survey were optimistic towards orders for September. Downstream enterprises are hesitant when placing orders give unclear current copper price trends, but as a clearer copper price trend is visible in the future, orders will gradually improve. Moreover, concentrated consumption for cables will arrive in September, and China Southern Power Grid (CSG) and State Grid Corporation of China (SGCC) will have more bidding projects. Coupled with cable demand for low-income housing construction, demand for copper rods and wires will increase.
Another 10% producers were pessimistic towards orders for September, involving mainly with copper rods used in railway construction. Since the July 23rd high-speed train crash, China's Ministry of Railways has been conducting overhauls across the country, and enterprises producing copper rods applied in railway construction have also strengthened efforts on quality check. Out of safety concerns, the pace of railway projects has slowed down, reducing demand for railway copper rods. In addition, although power cable demand is good right now, enameled wire demand remains weak. Therefore, these producers believed orders will be relatively poor during September.
The remaining 10% producers were unclear about September orders.