SHANGHAI, Mar. 28 (SMM) –Jingyi Metal Co., Ltd. and Anhui Jingcheng Copper Share Co., Ltd. produce copper tube/pipe and copper plate, sheet and strip, respectively. The two listed companies recently revealed their reports, showing that both of their raw material inventories have fallen compared with the end of 2009 and 2010.

Raw material costs at Jingyi Metal Co., Ltd. have decreased by 41.56% from the end of 2010, and 32.79% from the end of 2009. Raw material costs at Anhui Jingcheng Copper Share Co., Ltd. have fallen by 55.36% over the end of 2010 and 19.28% over the end of 2009. According to average spot copper prices in Shanghai, spot copper prices were RMB 59,125/mt during the last trading day in 2009, RMB 69,350/mt during the last trading day in 2010, and only RMB 55,250/mt during the last trading day in 2011. As copper prices stood at the lowest at the end of 2011 over the same period in 2009 and 2010, it can better reflect the falling trend of raw material inventories at the two companies.

LME copper prices experienced considerable declines in 2H 2011, falling from USD 9,905/mt on August 1 to USD 6,636/mt on October 3, down as high as 33%. Besides, terminal products of copper tube/pipe, plate, sheet and strip producers were negatively affected by sluggish domestic and overseas sales, so their operating rates had been moving at the lows in 4Q 2011. In this context, these producers chose to cut raw material inventories. SMM's latest survey confirms that raw material inventories at copper tube/pipe producers are currently near 13% of consumption, and 18% at copper plate, sheet, and strip producers, both considered historical lows.

Given a lack of improvement in downstream consumption, copper semis producers have little intention of stockpiling raw materials. SMM holds the view that copper semis producers will speed up raw material inventories again when downstream consumption improves substantively and cash flows ease further.