Average Operating Rate at China Copper Tube/Pipe Makers Up to 78.33% in December

Shanghai Metals Market surveyed 20 major domestic copper tube/pipe producers, covering 1.36 million tpy in capacity, and found that their average operating rate in December was 4.92% higher than a year ago.

  

Large copper tube/pipe manufacturers reported stable production in December since orders began to pick up during November. 

 

SMEs also saw an increase in sales during December after some smaller air conditioner manufacturers which had not begun building raw material stocks in November were now doing so in December. The average rate at medium-sized producers was 63%, up 3% on the month, while the average at small producers grew by 4.56% to 78.83%.

 

Both the volume and value of bids from government contracts for air conditioners during Q4 2013 grew sharply compared to past years. Preliminary data shows that government contracts for air conditioner procurement from 497 separate programs in December totaled 490 million yuan, up 56% from November and up 32% year-on-year. 

 

SMEs said consumption of bare pipe was boosted by improvements in the commercial central air conditioner market as well. Extreme weather conditions across the globe turned air conditioner manufacturers more optimistic since air conditioner demand overseas is expected to rise, which allowed producers to begin stocking finished goods for export orders in 2014, also lifting copper tube/pipe demand. 

 

Copper tube/pipe producers which would deliver goods after the Chinese New Year holiday were expected to maintain normal production during January, so SMM believed average operating rate at these producers may only fall marginally to 75.65% this month.

 

The proportion of raw material stocks to production at copper tube/pipe makers surveyed by SMM held steady during December at 15.56%. Despite an increase in orders, copper tube/pipe producers were still suffering from tight cash flows. In addition, many large air conditioner manufacturers paid for raw materials by acceptance bills, exacerbating financial problems at copper tube/pipe makers. In this context, producers were not willing to increase the proportion of raw material stocks.