Average operating rate at Copper Tube/Pipe Producers Down to 73.45% in October

SHANGHAI, Nov. 28 (SMM) – Average operating rate at Chinese copper pipe/tube producers fell 2.84% from September to 73.45% in October, due mainly to fewer working days during October and tight liquidity conditions, a Shanghai Metals Market survey showed.

The rate, the second lowest monthly average to date during 2013, was still up 11.33% year-on-year, according to SMM survey of 21 major domestic copper pipe/tube producers, with capacities totaling 1.38 million tonnes.

October is traditionally a busy month for copper pipe producers, but tight cash flows and lower demand overseas, as well as massive stocks built by downstream consumers during 1H 2013 left consumption weaker than usual during the seasonal high demand period.

Data from the ChinaIOL showed China’s household air conditioner output during October was 7.115 million units, down 9.5% from September, with sales also down 18.8% month-on-month to 6.331 million units. Finished goods inventories at air conditioner manufacturers did not rise as expected, but fell instead during October by 9.9% MoM to 5.387 million units, as tight liquidity throughout the sector limited manufacturers’ willingness to build stocks.

However, SMM believes production at copper pipe/tube makers would still remain stable in November. The number of growing working days would allow the average operating rate to return to September’s level of 76.43%.

The survey also revealed that the proportion of raw materials to finished goods at producers was 15.86%, virtually identical to September’s level. Among three categories of major copper semis producers surveyed by SMM, only copper tube/pipe segment did not report lower raw material stocks following the October holiday. Although sharp growth in copper pipe/tube consumption is normally not expected during the last two months of the year, copper pipe and tube producers anticipated air conditioner manufacturers should purchase more raw materials to fulfill export orders, and thus kept input stocks stable in October.