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Slack demand lowers 2018 operating rates across wire, cable producers

iconJan 7, 2019 11:25
Source:SMM
Rates averaged 81.73% in 2018, down 1.27 percentage points from 2017

SHANGHAI, Jan 7 (SMM) – Production enthusiasm across Chinese wire and cable producers weakened in 2018 as poorer consumption across end-markets reduced demand for such materials.

Operating rates across wire and cable manufacturers averaged 81.73% in 2018, down 1.27 percentage points from 2017, SMM data showed.

SMM expects copper consumption across China’s electric power industry to exceed 5.5 million mt in 2018, accounting for some 46% of overall copper consumption.

Wires and cables are widely used in the electric power industry. More than 85% of wire and cable manufacturers in China are small and medium-sized ones, and mainly produce low and mid-end products. China's top 10 wire and cable manufacturers account for just 7-10% of market share, much smaller than the 70% that the top 10 manufacturers in the US account for.

Industry concentration improved after a subway issue in Xi'an in 2017. It was reported that substandard electrical cables were used in subways and this prompted downstream buyers to focus on the quality of products and favour copper rods that were produced with copper cathode. This grew orders to larger producers.

Improved cash flows gave large wire and cable producers an upper hand over smaller ones when competing for bids issued by China's State Grid Corporation and China Southern Power Grid. 

Wire and cable
Copper

For queries, please contact Michael Jiang at michaeljiang@smm.cn

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