SHANGHAI, Jan. 25 (SMM) – Orders for aluminum wire and cable declined sharply as most power grid construction in north China has been suspended at the year’s end. As such, most aluminum wire and cable producers in China lowered output, causing average operating rates to fall to 64.29% in December.
Operating rates at small aluminum wire and cable producers with annual capacity below 50,000 mt dropped most sharply. The latest SMM survey found that almost all wire and cable producers in Qinghai and Gansu provinces have halted production. According to these producers, seasonal factors negatively affected power grid construction in northwest China, eroding demand for wire and cable. Power companies will not resume operation until March. Output at producers in the south such as Fujian, Guangdong and Jiangsu provinces also fell to some extent because production based on orders from northwest and north China will be postponed for the same reason. Producers say this situation happens every year.
Producers are divided about the overall situation of aluminum wire and cable industry in 2012. Large producers believe that domestic demand was relatively stable and that export demand grew significantly in 2012. SMEs, on the other hand, understand that profits declined sharply from 2011 due to intensified competition among producers and declining orders.
SMM believes that consolidation of small and medium wire and cable producers is inevitable given the large number of producers and overcapacity in the industry.