SHANGHAI, Aug 21 (SMM) – Large, medium-sized, and small Chinese manufacturers of brass bar all operated at lower rates in July as higher costs of raw materials scrap disrupted production and consumption from the real estate market declined.
An SMM survey showed that operating rates across small producers of brass bar, with annual capacity below 20,000 mt, declined the most in July, by 12.81 percentage points on the month to stand at 74.16%.
The rate for medium-sized plants, with annual capacity of 20,000-50,000 mt, lost 1.39 percentage points to 71.41%, and that for large producers, with annual capacity above 50,000 mt, slid 1.99 percentage points to 67.75%.
This lowered the rate across all 28 producers included in the survey, with total capacity of 1.02 million mt, by 2.71 percentage points on the month to 69.71% in July.
Some small mills failed to obtained quotas after fresh restrictions on the import of high-grade copper scrap, and this disrupted their production. Operation across the industry was also dented as concerns about less availability drove up prices of copper scrap, the feedstock to produce brass bar.
Weakness extended in the real estate market, a major downstream sector for brass bar, as National Bureau of Statistics (NBS) data showed that the floor space completed in China slid 11.3% from a year ago in the first seven months of 2019.
Stocks of copper scrap at brass bar plants barely changed last month, as producers procured raw materials as normal and a slow season kept them from stockpiling. Despite wide concerns, the market has yet to see a shortage of copper scrap given an increase of 106,200 mt in metal content of scrap imports in the first half of this year, showed customs data.
Operating rates across Chinese brass bar producers are expected to extend their losses in August, falling 1.76 percentage points from July to 67.94%, on worries about weak consumption in the near term.
