SHANGHAI, Jul. 19 (SMM) – The latest SMM survey of 20 major domestic copper tube/pipe producers revealed the following insights with regard to their July orders:
Based on the survey, these producers expect their average operating rate during July will move at 75.13%, down nearly 5% from June.
There is consensus among 60% of the surveyed copper tube/pipe producers that they will completely face a seasonal low-demand period throughout both July and August, and this will be especially true of refrigeration pipes. Participants in overseas markets are generally on holiday in July and August and therefore will greatly depress China's air conditioner exports. Meanwhile, as domestic markets are still overshadowed by curbs in the real estate sector, new demand for air conditioners is also limited from both urban dwellers and rural residents amid sluggish economic environment at present. According to ChinaIOL data, both China's domestic sales and exports of air conditioners were down 7% YoY during January-May, and in the face of this slack consumption, air conditioner producers are expected to scale back output appropriately in July and August. In this context, demand for copper tubes/pipes will also dwindle. If air conditioner sales in summer can significantly slash domestic inventories, the air conditioner industry is likely to improve in September.
30% of copper tube/pipe producers, mainly copper alloy tube/pipe producers, anticipate their orders will remain stable in July. Copper alloy tubes/pipes are largely applied in construction, chemical, and marine industries which do not have a clear dividing line for seasonal low- and high-demand period. Hence, these producers see July's orders will remain relatively steady. However, most of these producers said copper tube/pipe orders have been smaller thus far this year than the same period last year, so copper tube/pipe consumption stands little chance to reverse in the second half of this year.
The remaining 10% of producers predict copper tube/pipe orders will increase in July, citing copper prices may rebound in this month. Copper prices dropped several times in June and led to a drop in copper tube/pipe orders.