SHANGHAI, Jul. 10 (SMM) – With regard to copper wire rod orders for July, the latest SMM survey of major copper wire rod producers yielded the following insights:
Based on the survey, copper wire rod producers anticipate the average operating rate will inch down to 73.22% in July.
72% of market insiders hold the view their July orders will stay flat with June levels, which is partly due to a lack of new projects in large quantities. Besides, from current macroeconomic environment, actual demand is sluggish despite the government's relaxations in monetary policies as these moves turn markets worried over worsening economic environment. Furthermore, approvals for some investment projects have not achieve substantive progress and are not seen to boost copper rod consumption. They believe the enameled wire industry, a major downstream consumer of copper wire rod, faces a traditionally low demand period during July and August, and demand is likely to only improve in September.
14% of these producers anticipate July orders will increase slightly from the prior month since stable copper price trends may stimulate downstream producers to place orders actively. Copper wire rod consumption has remained sluggish since earlier 2012 for fears over copper prices and consumption. This has kept consumers of copper wire rod and other terminal consumers to maintain low inventories. However, if the view that economy has neared the bottom end in 2Q can be widely accepted, and if copper prices continue to stabilize, downstream producers will step up purchase volumes.
9% of these producers are pessimistic over the outlook as they believe current copper rod market is in significant surplus. Domestic copper wire rod demand has barely risen and even dropped amid slowing growth in investments, but new capacities of copper wire rod have constantly entered production, with large projects of 300,000 mt and 400,000 mt already started. This has heightened market competition. Hence, seasonally low demand period will make market surplus more pronounced during July-August.
5% of the surveyed copper wire rod producers cannot predict future orders.