SHANGHAI, Sept. 11 (SMM) – A recent SMM survey of 21 major domestic copper wire rod producers (total capacity: 3.76 million mt) revealed the following insights:
1) Average Operating Rate Up to 76.37% in August
The average operating rate at the surveyed producers was 76.37% during August, down 0.86% MoM, but up 1.7% YoY. The average operating rate has been over 75% for fourth straight month, and although the average operating rate at wire rod producers was down slightly during August, electric wire and cable producers posted their highest average rate so far this year. After copper prices surged during August, some traders pushed aggressively for sales at high prices by cutting processing fees. The fee cut, however, caused copper wire rod producers to restrict orders to long-term contracts, so the slight decline in August’s rate was not due to falling orders. The average operating rate is expected to rise slightly to 76.79% in September due to improved demand for enameled wire, electric wire and cable.
2) Raw Material Inventories Unchanged
Raw material inventories at surveyed copper wire rod producers during August were unchanged from July at 14.35% of production. Higher capital costs during 2H 2013 squeezed profits, but lower processing fees and tight liquidity were also behind the unwillingness of copper wire rod producers to build stocks.