SHANGHAI, Feb 15 (SMM) – Operating rates across Chinese manufacturers of copper tube and pipe climbed 3.19 percentage points month on month to stand at 77.9% in January, SMM data showed. On a yearly basis, the rate slid 6.94 percentage points.
The week-long Chinese New Year holiday and low prices of copper prompted downstream consumers to restock, and this accounted for the higher operating rate on the month.
SMM learned that output schedule across domestic air-conditioner manufacturers increased 17% month on month and 2% year on year in January. Production for domestic sales rose significantly, while that for exports slid nearly 25% from a year ago. Exporters rushed to deliver orders at the fourth quarter of 2018, on concerns over US tariffs slated to take effect in January, and this depressed exports.
The recent release of China's January trade data showed that growth rate of domestic import and export remained robust, as exporters rush to beat tariffs. This caused a month-on-month increase in the operating rate of copper tube and pipe plants. On a yearly basis, a higher inventory base in the home appliance industry kept the rate lower in January. Most producers said that their planned output in 2019 barely changed from 2018.
The ratio of raw material inventory to output at copper tube and pipe producers came in at 16.43% in January, up 0.37 percentage point as plants stockpiled raw materials for CNY.
For February, CNY closure is expected to lower operating rates across manufacturers of copper tube and pipe by 19.62 percentage points month on month, to 58.28%. This will be 9.29 percentage points lower from February 2018.
Most producers remained suspended for CNY breaks at the beginning of February, and mills in the north are unlikely to resume after February 19. Some copper pipe companies also expressed concern about the continued increase in air-conditioner inventories.