SHANGHAI, Oct. 15 (SMM) – SMM's most recent survey of 21 major domestic copper tube/pipe producers (total capacity: 1.24 million mt/yr) yielded the following insights:
1) Average Operating Rate Down 3.49% in September
The average operating rate during September at these domestic copper tube/pipe producers was 67.94%, down 3.49% MoM. The average operating rate has fallen for the last four months, with low copper tube/pipe demand the main factor causing September's rate to fall. Spot copper prices during September also rose rapidly above RMB 60,000/mt, up from RMB 56,000/mt early in the month, depressing market demand during the already low demand period.
Government control policies on China's real estate sector are still in place, so demand for some home appliances such as air conditioners and refrigerators cannot improve, which is also depressing copper tube/pipe demand. Sluggish foreign markets continue to depress copper tube/pipe exports and other terminal products using copper. In this context, SMM believes the average operating rate is unlikely to increase in October.
2) Raw Material Inventories Up to 19.40%
Raw material inventories at the surveyed copper tube/pipe producers rose to 19.40% of production during September, the highest level for the year. Since the survey was conducted prior to China's National Day holiday, some producers had replenished stocks for use during the holiday, which caused raw material inventories to increase from August's 15.09%. In addition, some copper tube/pipe producers believed copper prices would rise after the holiday, so they opted to build up stocks at prices below RMB 59,000/mt.