SMM Copper Survey: Average Operating Rate Increases to 73.41% in December

SHANGHAI, Jan. 28 (SMM) – SMM's latest survey of 20 major domestic copper tube/pipe producers (total capacity: 1.2 million mt/yr) yielded the following insights:

1) Average Operating Rate Increases to 73.41% in December
The average operating rate during December at the surveyed copper tube/pipe producers was 73.41%, up 2.29% MoM and 4.11% YoY. According to ChinaIOL.com data, China's air conditioner output increased 15.2% MoM in December, with sales also rising 15.7% MoM. These figures signal a turnaround in air conditioner consumption, which prompted copper tube/pipe producers to step up production. Finished goods inventories at air conditioner producers during December were also up for a fourth straight month, gaining 5% MoM from November, which is a sign that air conditioner manufacturers are preparing for the next peak demand period. In this context, SMM predicts the average operating rate at the surveyed copper tube/pipe producers will rise slightly in January to 73.78%.

2) Raw Material Stocks Down to 12.78% in December
Raw material stocks during December at the surveyed producers were 12.78% of production, down 2.92% MoM, and due largely to two factors. First, air conditioner output was down during most of 2012, which reduced copper tube/pipe demand. Second, copper tube/pipe producers were suffering from tight year-end credit and were unable to replenish stocks in large quantities.