Average Operating Rate at Chinese Copper Wire Rod Makers Down in May 2014

SHANGHAI, Jun. 12 (SMM) – The average operating rate at major copper wire rod producers in China fell 2.42 percentage points in May to 70.8%, due partly to difficulties in sourcing raw materials, according to an SMM survey.

SMM surveyed 20 producers with capacity totaling 3.85 million tpy.

Copper premiums in China held up and averaged 453 yuan per tonne in May, well above the premiums for term shipments. As a result, some copper wire rod makers ran out of raw material and were forced to cut or even halt production.

Some producers also lowered operating rates out of fears of cash flow shortages due to payment delays and tightening liquidity at the mid-year point. Several producers reported production stoppages due to cash shortages.

Copper wire rod consumption in electric wire and cable sector remained stable in May, but demand from many enameled wire manufacturers declined.

Heading into June, some copper wire rod makers that suspended operations during May are expected to reopen after supply conditions in China’s physical copper markets improve. SMM expects the average operating rate at wire rod producers to rise to 73.84% in June, but competition in copper wire rod markets will heighten after new capacities of Jinchuan Group and Daye Nonferrous Metals come online.