Eased liquidity, more orders to grow operating rates across scrap-using rod producers in Sep

SHANGHAI, Sep 17 (SMM) – Improved cash flow and orders are likely to increase operating rates across domestic producers of copper rods, with copper scrap as feedstock, by 5.32 percentage points on the month to 43.9% in September, a SMM survey showed.

Sellers increased supplies to generate cash, while the cash crunch across producers of wires and cables also eased. Orders from infrastructure construction and the State Grid grew. Restarts of two producers are expected to grow rates across large rod producers, with scrap as feedstock, by 10.09 percentage points from a month ago to 51.8% in September. Rates across medium-sized plants are likely to climb 1.5 percentage points.

Environmental policies and weak demand lowered operating rates in August by 0.24 percentage points from July to 38.5%. The plunge in SHFE copper prices and smaller supplies of copper scrap shrank the price spread between copper scrap and copper cathode and that drove orders to producers of rods with copper cathode as raw material. Two large rod producers that use copper scrap closed for maintenance in light of thin profits, and two medium-sized producers shut without scheduled restarts. Some small plants in Hebei and Jiangsu provinces also closed for the same reason.

Rates across large producers with annual capacity above 100,000 mt stood at 41.7% in August, rates across medium-sized producers with annual capacity at 50,000-100,000 mt stood at 36.3% and rates across small plants with annual capacity below 50,000 mt at 35.4%.