Tight scrap availability subdues operations at brass bar producers in Aug

SHANGHAI, Sep 18 (SMM) – Chinese brass bar manufacturers further scaled back their operations in August, as a low consumption season grinded on and also raw material availability was tight.

An SMM survey showed that the average operating rate across 28 brass bar producers in China, with total capacity of 1.02 million mt/year, fell for a fifth month in a row, declining 2.14 percentage points from July to 67.56% in August.

The rate for large plants, with annual capacity of above 50,000 mt, held stable, dipping 0.44 percentage point to 67.31%.

Small plants with annual capacity of below 20,000 mt, however, saw their operating rates slip 4.72 percentage points to 69.44%, subdued by a shortage of raw material copper scrap. A lack of scrap import quotas drove them to domestic suppliers, who held back sales as copper prices stayed at low levels in August.

The average operating rate across medium-sized brass bar producers with annual capacity of 20,000-50,000 mt, decreased by 3.92 percentage points to 67.5% last month.

Demand for brass bar failed to improve in August, as the property sector remained sluggish. Data from the National Bureau of Statistics showed that property completion by floor space in China dropped 10% year on year in August.

In September, brass bar producers will likely move up to a higher gear, as a traditional high season for consumption arrives. The average operating rate is expected to rise 1.73 percentage points from August to 69.29%.

The recovery at small and medium-sized plants, however, will likely be limited by raw material supply tightness, as they cannot import Category 6 copper scrap unless they have quotas approved by authorities.