SHANGHAI, Jul. 2 (SMM) – A recent SMM survey of 21 major domestic wire and cable producers (total capacity: 1.036 million mt/yr) revealed the following insights:
1) June Average Operating Rate Rises 4.35% MoM
The average operating rate during June at wire and cable producers was 77.78%, up 4.35% MoM, and mainly attributed to power transmission and transformation projects for the State Grid Corporation of China (SGCC). In addition, orders for China Southern Power Grid (CSG) from late 1Q and early 2Q were delivered in June, which drove up demand for copper used by wire and cable producers. Data shows that SGCC opened tenders for 872.29 km of cable for the second group of projects and 491.44 km in the third group of projects. Some producers said the scale of projects was smaller than last year, and thus would have a limited positive impact on future operating rates. The number and scale of domestic projects have slowed this year and will likely lower demand for wire and cable. In fact, some CSG orders scheduled to be completed in July are still without clear specifications and delivery dates.
2) Raw Material Inventories Down in June
Raw material inventories during June at the surveyed domestic wire and cable producers were 23.48% of production, down 2.32% from May. Spot copper prices generally hovered around RMB 55,000/mt during June since uncertainty surrounding the European debt crisis lingered. In this context, most producers limited raw material inventories in order to minimize risks from volatile copper prices.