SMM Copper Survey: Average February Operating Rate Falls to 57.77%

SHANGHAI, Mar. 11 (SMM) – A recent SMM survey of 21 major domestic copper wire rod producers (total capacity: 3.44 million mt/yr) revealed the following insights:

1) Average February Operating Rate Falls to 57.77%
The average operating rate during February at the surveyed copper wire rod producers fell to 57.77% due to the Chinese New Year holiday factor and the seasonally low demand period. According to SMM survey, the average rate during February at electric wire and cable producers fell to 48.46%, which reduced copper wire rod demand. In addition, the enameled wire sector, another important consumer of copper wire rod, reported demand during the February peak demand period was soft. Post-holiday demand for power cable has just begun to recover, and since construction projects in north China remained closed or proceeding slowly due to cold weather, wire and cable demand from the construction sector was also low. As the weather improves, however, and as downstream producers resume operations, the average operating rate during March at the surveyed copper wire rod producers should show some improvement. 

2) Raw Material Inventories Continue Rising in February
Raw material inventories during February at the surveyed producers grew to 22.58% of production, up 7.28% from January's 15.3%. Spot copper prices below RMB 56,500/mt enticed some copper wire rod producers to buy, while some producers opted to replenish raw material stocks due to post-holiday production needs. Others entered the market since they believed copper prices would rise further in the near future.