Average Operating Rate at Major Electric Wire and Cable Producers Down to 82.55% in July

The average operating rate at the surveyed producers was 82.55% in July, down 2.15% MoM, but up 8.44% YoY. In general, operating rates at surveyed wire and cable producers were virtually unchanged on a weekly basis, but rates at enameled wire producers were down due to the low demand seasons at major enameled wire consumers including home appliance and automobile manufacturers. In addition, hot summer temperatures have also reduced demand for enameled wire since many enterprises closed during this period. The surveyed wire and cable producers are generally large enterprises without liquidity pressures, but recent orders are up since smaller producers have merged due to weak competitiveness. At present, orders at wire and cable producers come mainly from national or regional power grids. So far this year, orders from metro lines and railways have grown significantly, but whether or not this growth continues will depend on availability of funds earmarked for those projects. The average operating rate is expected to fall to 81.87% in August as the impact on outdoor projects from high temperatures becomes more pronounced and delays demand for wire and cable. 

 

Raw material inventories were 25.43% of production in July, down 2.4% MoM and the lowest level so far this year. The cash liquidity crunch eased in July, but remains tight, and delayed payment from some projects only exacerbated cash flow problems. As a result, electric wire and cable producers purchased goods on an as-needed basis and kept raw material inventories low to reduce cash flow needs.