SHANGHAI, Jul. 9 (SMM) – A recent SMM survey of 22 major domestic copper wire rod producers (total capacity: 3.65 million mt/yr) revealed the following insights:
1) Average Operating Rate for June Edges Up
The average operating rate during June at copper wire rod producers was 74.07%, up 0.76% MoM, and largely driven by consumption of wires and cables used by the electric power sector. As new projects from the State Grid Corporation of China (SGCC) were contracted and as delivery dates for earlier orders neared, operating rates at electric wire and cable producers rose by 4% MoM, helping boost the average operating rate at copper wire rod producers during June as well.
Nevertheless, new electric wire and cable orders are still limited and there is currently a surplus in copper wire rod capacity, which may cause the average operating rate at copper wire rod producers to fall again in July.
2) Both Raw Material and Finished Goods Inventories Fall
Raw material inventories during June were 15.0% of production, considered relatively low and attributable to a lack of clear future copper price trends. Finished goods inventories during June also fell to 9.76% of production and due mainly to a slight increase in orders for electric wires and cables. In addition, copper prices below RMB 55,000/mt enticed some downstream producers to buy and helped consume some finished goods of copper wire rod.