SHANGHAI, Oct. 30 (SMM) – Average operating rate at Chinese copper tube/pipe producers during September only edged up 0.53% from August to 76.29%, as consumption in the peak demand month grew slower than usual, an SMM survey showed.
However, the rate was 8.35% higher than a year ago, according to a survey of 20 Chinese copper tube/pipe producers, with capacities totaling 1.36 million tpy, conducted by Shanghai Metals Market.
Copper tube/pipe consumption did not show noticeable improvement during the seasonally high demand month of September, SMM observed.
Data from information provider ChinaIOL showed output of household air conditioners rose 8% on the month and 17% year-on-year during September, to 7.86 million units, with only Midea reporting an upswing in output after the summer break in August while other air conditioner producers maintaining stable production.
Finished product inventories at air conditioner producers fell 29% from a year ago to 4.81 million units in September, ChinaIOL data showed. Most producers are not expected to increase output significantly given the current tight liquidity situation. When combined with 3-5 day holiday at some copper tube/pipe producers for China’s National Day, the average operating rate may fall to 72.26% in October.
The survey also revealed that the average ratio of raw materials to finished goods at copper tube/pipe producers rose to 15.23% in September due mainly to the Chinese National Day holiday.
However, regardless of any holiday effect, producers remained unwilling to increase raw material stocks. Capital costs at enterprises were driven up in late Q3 and early Q4 given tight liquidity and high discount rates for acceptance bills. In addition, copper tube/pipe producers were reluctant to raise inventories before copper prices showed any clear trends.