SHANGHAI, Mar. 5 (SMM) – Average operating rate at Chinese copper wire and cable producers plunged 23.29% to 52.18% in February, due to the week-long Chinese New Year holiday, according to an SMM survey.
A majority of the 20 producers, with capacity totaling 1.022 million tpy, were still fulfilling orders booked before the holiday and only reported limited new orders in February. Combined with tight liquidity and falling copper prices, enterprises were discouraged from increasing operating rates.
Consumption of automotive, electronic and enameled wires recovered, however, and demand was especially strong for wires used in auto parts, as automobile sales hit a record high of 2.16 million vehicles in January, driven in part by traffic control measures and car purchasing restrictions implemented in some Chinese cities.
With better weather in March, the resumption of outdoor construction projects should boost demand for power cables, which will also drive up operating rates at copper wire and cable producers during March to 72.69%.
Ratio of raw material stocks to finished goods at these wire and cable producers increased 3.45% MoM to 33.72% in February.
Stocks were up since some enterprises with strong financials replenished stocks after the holiday when copper prices fell. Lower operating rates at wire and cable manufacturers limited consumption of raw materials, which also helped push up the proportion of raw material stocks.