SHANGHAI, Sep 9 (SMM) – Operations across Chinese manufacturers of copper tubes and pipes slowed more than expected in August, showed an SMM survey, as inventories remained high and as the heat wave went on for a shorter period than previous years.
The average operating rate across copper tube and pipe producers in China fell for a fourth month in row in August, losing 7.2 percentage points from July to 73.04%, according to the SMM survey released on Friday September 6.
On a year-over-year basis, the rate declined 6.75 percentage points. The survey covered 19 producers, with total capacity of 2.13 million mt on an annualised basis.
Major copper tube/pipe users, air-conditioner producers, often enter a low season in August, when some of them conduct maintenance. Longer-than-usual maintenance this year also led to the weaker-than-expected operations at AC producers. The sluggish property sector, meanwhile, failed to offer some support.
Sharply weaker consumption, together with stockpiling when the escalation of US-China trade tensions pulled copper prices lower, bolstered raw material inventories at copper tube and pipe producers last month.
The ratio of raw material inventory to output climbed 2.12 percentage points month on month to 16.62% last month.
The operating rate at Chinese manufacturers of copper tubes and pipes is expected to rebound 3.68 percentage points month on month to 76.72% in September, as producers recover from maintenance and stockpile for the fourth quarter.
A traditional high consumption season in September-October will also be a driver of copper tube and pipe production.
September’s operating rate will likely rise 4.77 percentage points from a year ago.