Weak auto output lowers Dec operating rate at copper plate, strip, and foil plants

SHANGHAI, Jan 18 (SMM) – Weakness in the domestic auto sector and slow downstream purchases at home and abroad continued to depress production enthusiasm across China’s producers of copper plate, strip, and foil in December, an SMM survey found. 

Operating rates across those producers stood at 71.76% in December, down 0.92 percentage point from November, the third consecutive month of decline. Compared to December 2017, the rate fell 2.81 percentage points.

In the second half of 2018, production and sales of cars in China dropped year on year. Automobile production stood at 2.48 million mt in December 2018, down 18.39% on the year, showed data from the China Association of Automobile Manufacturers (CAAM).

Trade uncertainties with the US continued to shrink China’s exports last month. This, coupled with slow purchases from domestic downstream consumers at the end of the year, dragged down the operating rate in December.

The rate in January 2019 is likely to extend its decline by 2.66 percentage points on the month, and average 69.1%.

CAAM forecasted that China’s auto sales could hit a ceiling in 2019, and remain flat from 2018 at 28 million units. For January, the market expects lower production and sales. Slower macroeconomic growth added to the bearish outlook on downstream consumption in 2019, which also accounted for the lower rate.

The ratio of raw materials inventory to output at producers of copper plate, strip, and foil stood at 19.03% in December, up 0.6 percentage point from November as producers stockpiled for CNY. Slow sales dragged on production in December, and this also resulted in a higher ratio of raw materials inventories.

SMM surveyed 21 domestic producers of copper plate, strip, and foil in December, with capacity of 1.25 million mt.