SHANGHAI, Jan. 9 (SMM) –A recent SMM survey of 22 major domestic copper wire rod producers (total capacity: 3.48 million mt/yr) revealed the following insights:
1) Operating Rates Fall Noticeably in December
The average operating rate for December at the 22 major domestic copper wire rod producers fell noticeably to only 77.11%, down nearly 10% from November. As the year ended, the surveyed producers were under heavy cash flow pressures, forcing them to slow production. Copper wire rod orders from downstream enterprises were also down, contributing to the drop in operating rates. The inverted price relationship between scrap and refined copper eased somewhat in early December, so some orders flowed to low-oxygen copper rod producers using scrap copper as a raw material, but negatively impacted some large copper wire rod producers which use refined copper as raw material.
2) Copper Wire Rod Producers Have Little Interest in Replenishing Raw Material Stocks
Raw material inventories at the surveyed copper wire rod producers were only 9.34% of production last week, down slightly from a month earlier, and a sign copper wire rod producers were comfortable carrying minimal stocks. Most copper wire rod producers were skeptical toward stable copper prices since December and remained pessimistic towards future copper prices, so they kept raw material inventories relatively low. Since the surveyed producers will halt production during the Chinese New Year holiday, there is little current interest in stockpiling raw materials.