SHANGHAI, Nov. 7 (SMM) –A recent SMM survey of 20 major domestic copper plate, sheet, strip and foil producers (total capacity: 919,000 mt/yr) revealed the following insights:
1) September Operating Rates Down Slightly MoM
The average operating rate for September at the 20 major domestic copper plate, sheet, strip and foil producers was 59.2%, down 2% from August's 61.2%. There were two major reasons behind the drop in operating rates. First, as copper prices fell as much as 24.4% in September, some orders received by surveyed producers were delayed until the copper price trend was clearer. Second, copper plate, sheet, strip and foil end-users had some overseas orders, but unfavorable export conditions for electronic products and light fittings negatively affected demand for copper plate, sheet, strip and foil used in these products. As domestic economic growth is slowing and since international economic conditions are still volatile, operating rates will not likely improve noticeably in 4Q.
2) Raw Material Inventories in September Down Further
Raw material inventories during September at the 20 surveyed producers were 18.7% of production, down 5.9% from August levels.
Most producers in the survey told SMM that they had no intention of stockpiling raw materials given steadily falling demand, opting instead building stocks based on orders. Recent volatility in copper prices has also increased financial risks of holding raw materials, which was another factor cited for keeping stock levels low.