SHANGHAI, Nov. 14 (SMM) – Average operating rate at Chinese copper wire rod producers fell 1.23% on the month to 74.76% in October, primarily influenced by the Chinese National Day holiday and waning demand, an SMM survey showed.
The rate was still 5.74% higher than a year earlier, according to the survey of 22 copper wire rod producers with capacity totaling 3.98 million mt undertaken by Shanghai Metals Market.
The monthly decline was due in part to the Chinese National Day holiday, while demand for copper rod was also down in October as electric cable producers turned their focus to payment collection in Q4 after fulfilling orders. The market for fine wire, however, improved, with consumption of enameled wire, automobile wire, and wire for transformers picking up from Q3.
Demand for railway contact wire remained stable, with new project bids released. However, uncertainties remained over the timing of deliveries and some producers were still reporting payment delays. As markets continued to experience tight liquidity so far during November, some producers rejected orders for which payment may not be collected on time. In this context, SMM believed the average operating rate at copper wire rod producers for November would be around 74.44%.
The survey also indicated that average ratio of raw materials to finished goods at the surveyed producers were 13.89% in October, down 0.78% from September.
Copper consumers only purchased raw materials at low prices as copper prices kept consolidating, limiting stocks to improve cash flows. Most of these producers were not overly pessimistic towards copper price trends and were still willing to buy raw materials when spot prices fell to 51,000-52,000 yuan a tonne, but only purchased to order or stopped buying when prices exceeded 52,000 yuan per tonne.