SHANGHAI, Dec. 31 (SMM) – A recent SMM survey of 20 major domestic electric wire and cable producers (total capacity: 978,000 mt/yr) revealed the following insights:

1) Average Operating Rate Down to 76.59% in December
The average operating rate during December at the surveyed electric wire and cable producers was 76.59%, down 2.8% MoM, and largely attributed to two factors. First, construction in north China slowed due to cold weather, which lowered demand for electric wire and cable. Projects in other parts of China also slowed as the year-end approached, further lowering demand. Second, the surveyed producers eyed the return of funds at the  year’s end, lowering output and cutting sales. SMM expects the average operating rate will fall further during January 2013.

2) Raw Material Inventory Up MoM in December
Raw material stocks during December at the surveyed producers were 25.12% of production, up 4.24% MoM. Some producers increased raw material stocks as copper prices fell toward  RMB 56,500/mt during the second half of December and before suppliers were closed during the New Year holiday. However, not all electric wire and cable producers were eager to replenish stocks since the Chinese New Year holiday is still over one month away and since the copper price trend is still unclear. Tight cash flows at the surveyed producers were also limiting raw material inventories.