SHANGHAI, Mar. 5 (SMM) –A recent SMM survey of 20 major domestic copper wire rod producers (total capacity: 3.212 million mt/yr) revealed the following insights:
1) Copper Wire Rod Demand Rallies in February
The average operating rate for February at the copper wire rod producers contacted by SMM was 75.42%, up 14.5% MoM. Copper wire rod demand was improving, but was still considered weak. SMM expects the average operating rate at copper wire rod producers will continue to rise in March, but average operating rate for 1Q 2012 will be lower than the same period last year.
Most producers in the survey were pessimistic toward the pace of the post-holiday recovery in demand, which many said was below December 2011 level. Demand for wire used in the power industry was still improving but construction projects in North China have not begun due to cold weather.
2) Copper Wire Rod Producers Keep Raw Material Inventories Low
Raw material inventories at the surveyed copper wire rod producers were 16.04% of production in February, up 1.33% from January. The rise in inventories was found mainly at a small number of small producers which were forced to replenish raw material stocks now since previous cash flow problems forced them to suspend production. Other producers continued to purchase materials as needed, but most chose to suspend purchasing at prices above RMB 60,000/mt.
Finished goods inventories in February were 11.84%, down 4.4% from the previous month and a sign that consumption had improved.