SHANGHAI, Jul 16 (SMM) – Operations across Chinese manufacturers of copper tubes and pipes in June sharply weakened from a year earlier, showed an SMM survey, as a seasonal lull arrived earlier than usual.
Operating rates across copper tube and pipe producers averaged 86.38% last month, down 9.22 percentage points from June 2018 and 4.55 percentage points from May.
The survey covered 19 producers, with total capacity of 2.13 million mt on an annualised basis.
Orders for copper tubes and pipes slipped as their major consumer, air conditioner producers in China, were frustrated by high inventories of finished goods.
Weaker domestic sales, combined with export declines as the trade dispute with the US took a toll, pushed inventories of air-conditioners higher, and drove producers to slow operations.
The ratio of raw material inventory to output at copper tube and pipe producers grew 0.52 percentage point from a month ago to stand at 13.63% in June, as consumption remained sluggish and as producers stockpiled after copper prices dropped at the start of the month.
Air-conditioner sales are set to significantly shrink in July after semi-annual promotion in June, which will pile on more pressure on copper tube and pipe producers.
Planned production across key Chinese air-conditioner producers in July dropped over 10% from a year ago.
SMM expects the operating rates across Chinese copper tube and pipe producers to decrease by 7.37 percentage points month on month and 10.48 percentage points year on year to 79.01% this month.