Average Operating Rate at Copper Wire Rod Producers Holds Steady in September-Shanghai Metals Market

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Average Operating Rate at Copper Wire Rod Producers Holds Steady in September

Data Analysis 05:32:13PM Oct 15, 2013 Source:SMM

SHANGHAI, Oct. 15 (SMM) – A recent survey conducted by Shanghai Metals Market (SMM) of 21 major domestic copper wire rod producers (total capacity: 3.76 million mt) revealed the following insights: 

 
1) Average Operating Rate Down to 76.02% in September 
The latest SMM survey finds the average operating rate at 21 major copper wire rod producers was 76.02% in September, down 0.35% MoM. Robust demand from electric wire and cable helped operating rates remain high during July and August, but demand at the surveyed producers during the tradition high demand months of September and October only improved slightly. Strong demand in the motor, compressor, and transformer sectors also failed to materialize, which also hurt wire rod producers. Although demand from railway projects is stable, a lack of cash liquidity for some projects will continue to negatively affect demand for copper wire rod. Some copper rod producers had closed for 3-5 days during the Chinese National Day holiday, which negatively affected production, and since there are now only low expectations for the month of October, a traditionally high demand month, the average operating rate for October should fall to 74.04%. 
 
2) Raw Material Inventories Remain Stable    
During September, raw material inventories at the surveyed producers were 14.67% of production, unchanged on a monthly basis. Low processing fees and high capital costs have squeezed profits at most copper wire rod producers, while market pessimism is also depressing sales and demand for raw materials, so copper wire rod producers prefer to keep raw materials under tight control.  
 
3) Stable Scrap Copper Consumption at Copper Wire Rod Producers 
During September, scrap copper consumption at the surveyed copper wire rod producers was essentially unchanged on a monthly basis. The price difference between scrap and refined copper did not expand further in September, and supply shortages of scrap copper eased as copper prices generally remained over RMB 52,000/mt. However, strict environment protection inspections in north China and higher quality requirements reduced demand for copper rod with scrap copper as the raw material. In addition, processing fees for copper rod were generally between RMB 600-800/mt, eroding any price advantages for scrap copper rod. In this context, scrap copper use at copper wire rod producers remained generally stable during September.  
 

Average Operating Rate at Copper Wire Rod Producers Holds Steady in September

Data Analysis 05:32:13PM Oct 15, 2013 Source:SMM

SHANGHAI, Oct. 15 (SMM) – A recent survey conducted by Shanghai Metals Market (SMM) of 21 major domestic copper wire rod producers (total capacity: 3.76 million mt) revealed the following insights: 

 
1) Average Operating Rate Down to 76.02% in September 
The latest SMM survey finds the average operating rate at 21 major copper wire rod producers was 76.02% in September, down 0.35% MoM. Robust demand from electric wire and cable helped operating rates remain high during July and August, but demand at the surveyed producers during the tradition high demand months of September and October only improved slightly. Strong demand in the motor, compressor, and transformer sectors also failed to materialize, which also hurt wire rod producers. Although demand from railway projects is stable, a lack of cash liquidity for some projects will continue to negatively affect demand for copper wire rod. Some copper rod producers had closed for 3-5 days during the Chinese National Day holiday, which negatively affected production, and since there are now only low expectations for the month of October, a traditionally high demand month, the average operating rate for October should fall to 74.04%. 
 
2) Raw Material Inventories Remain Stable    
During September, raw material inventories at the surveyed producers were 14.67% of production, unchanged on a monthly basis. Low processing fees and high capital costs have squeezed profits at most copper wire rod producers, while market pessimism is also depressing sales and demand for raw materials, so copper wire rod producers prefer to keep raw materials under tight control.  
 
3) Stable Scrap Copper Consumption at Copper Wire Rod Producers 
During September, scrap copper consumption at the surveyed copper wire rod producers was essentially unchanged on a monthly basis. The price difference between scrap and refined copper did not expand further in September, and supply shortages of scrap copper eased as copper prices generally remained over RMB 52,000/mt. However, strict environment protection inspections in north China and higher quality requirements reduced demand for copper rod with scrap copper as the raw material. In addition, processing fees for copper rod were generally between RMB 600-800/mt, eroding any price advantages for scrap copper rod. In this context, scrap copper use at copper wire rod producers remained generally stable during September.