SHANGHAI, Mar. 4 (SMM) – A recent SMM survey of 21 major domestic electric wire and cable producers (total capacity: 997,000 mt/yr) revealed the following insights:
1) Average February Operating Rate Falls to 48.46%
The average operating rate during February at the surveyed producers fell even further to 48.46%, due to the Chinese New Year holiday. The first quarter of the year is also traditionally the low demand period for electric wire and cable consumption. Cold weather also impacts construction, further slashing wire and cable demand. Downstream enterprises are now gradually resuming operations following the Lantern Festival on February 24th, so electric wire and cable producers were not eager to deliver existing orders. Some of the surveyed producers which won bids before the holiday say the State Grid Corporation of China (SGCC) and China Southern Power Grid (CSG) will only take delivery of goods in late March or early April, and that some orders are for 2H 2013. As a result, February's average operating rate fell below 50%, but should increase gradually during March.
2) Raw Material Inventories Rise Steadily During February
Raw material inventories during February at the surveyed electric wire and cable producers climbed to 49.83%, up 15.25% MoM, and due in part to a sharp drop in copper consumption. In addition, SGCC and CSG say the bidding price for copper was around RMB 58,500/mt, but copper prices fell sharply immediately following the holiday. As a consequence, electric wire and cable producers replenished stocks in quantities only necessary to meet production needs.