SHANGHAI, Jan. 16 (SMM) –A recent SMM survey of 20 major domestic copper plate, sheet, strip and foil producers (total capacity: 907,000 mt/yr) revealed the following insights:

1) Operating Rates Continue to Fall in December
The average operating rate for December at the producers was 52.6%, down 2.3% MoM and 3.6% YoY, and the lowest rate during 2011. Since Chinese exports were dampened by sluggish US and European markets, operating rates at the surveyed producers fell by nearly 10% during 4Q 2011, and SMM believes operating rates will continue to fall in January due to the impact from the New Year and Chinese New Year holidays.

2) Raw Material Inventories Up Slightly
Raw material inventories during December at the surveyed producers were up slightly to 24.4% of production. Since cash flows remain tight, any increases in raw material inventories were limited. Copper prices have been stable since the start of 2012, and although most producers will suspend production during the Chinese New Year holiday, they still need to build pre-holiday stocks since many expect LME copper prices will rise during the holiday period. In this context, raw material inventories during January will rise, but still be limited by cash flows.