SMM, 18 October:

In September, the operating rate of brass rod enterprises was 72.53%.

According to SMM research data, the average operating rate of brass rod enterprises in September was 72.53%. It rebounded 4.96 percentage points from the previous month. Among them, the operating rate of large enterprises (annual production capacity ≥ 50,000 tons) was 71.73%, up 4.43 percentage points from the previous month, and that of medium-sized enterprises (20,000 tons ≤ annual production capacity < 50,000 tons) was 73.73%, up 2.36 percentage points from the previous month. The operating rate of small enterprises (annual production capacity < 20,000 tons) was 72.13%, 0.58 percentage points higher than the previous month.

Brass rod consumption improved significantly in September. September entered the market traditional consumption "peak season", led by the "gold, nine and silver ten", brass rod downstream performance demand recovery. According to the national real estate development investment announced by the Bureau of Statistics in September, from January to September 2019, the national real estate development investment increased by 10.5% compared with the same period last year, and the overall performance grew steadily. The mainstream terminal of brass rod consumption led to the recovery of demand in the brass rod industry. In addition, companies are also preparing for holiday inventory as they face the National Day holiday in October. In terms of enterprise size, the pace of recovery of small enterprises is relatively slow, and SMM believes that it is still mainly affected by the impact of raw materials. As the domestic small brass rod enterprises basically do not have the qualification to import scrap copper, and the copper price continues to maintain the range shock in September, for scrap copper, the pattern of scrap copper market is still the same, so the production of some small enterprises is restricted.

Brass rod business inventories continued to grow this month. On the one hand, some enterprises prepare for the raw materials in the fourth quarter, because the import of scrap copper is expected to be greatly reduced in the fourth quarter, enterprises are worried about the impact, there is a certain reserve behavior. On the other hand, some enterprises maintain normal production during the National Day holiday, so they also have a reserve for this purpose.

The operating rate of brass rod enterprises is expected to be 71.47% in October.

According to the expected orders of SMM research companies, the operating rate of brass rod enterprises in October is expected to be 71.47%, down 1.06 percentage points from September and up 4.86 percentage points from a year earlier. The decline in construction in October was still mainly affected by the National Day holiday, with factories generally taking 2-5 days off, thus affecting some of the starts. If the interference of holiday factors is excluded, the overall start-up performance of enterprises in October is better than that in September, especially for products with fast-selling nature such as plumbing and electronics downstream, China will usher in the "double Eleven" promotion stage to stimulate copper rod consumption.

(research enterprises: 28, production capacity: 1.02 million tons).

(SMM Kwong Chi-si)