[SMM Analysis] the operating rate of brass rods rose in March, and terminal concerns about exports increased.

SMM, 12 April:

The average operating rate of brass rod companies was 73.94 per cent in March, according to SMM. It rose 48.88 percentage points from a month earlier, down 6.79 percentage points from the same period last year. Among them, the operating rate of large enterprises (annual production capacity ≥ 50,000 tons) was 73.73%, an increase of 48.71 percentage points over the previous month, and that of medium-sized enterprises (20,000 tons ≤ annual production capacity < 50,000 tons) was 76.81%, an increase of 50.59 percentage points over the previous month. The operating rate of small enterprises (annual production capacity < 20,000 tons) was 73.94%, an increase of 42.47 percentage points over the previous month.

The start of domestic copper rod enterprises improved significantly in March, mainly as follows: in early March, the regional governments actively promoted the resumption of work and resumption of production, and the trans-regional logistics restrictions were gradually eliminated, and the problems of production and transportation were solved; in addition, the epidemic led to the accumulation of demand in February to the release in March, the basic production and marketing of brass rod enterprises were excellent this month, and the production and marketing of some small and medium-sized enterprises even reached an all-time high. In terms of inventory, enterprises have relatively sufficient raw materials in March. Due to the collapse in copper prices and the resistance to the decline in the price of miscellaneous copper, many enterprises can use lower-cost raw materials such as copper plus zinc or electrolytic copper plus zinc instead. Therefore, some enterprises that have been using waste brass can also store raw materials in the market more easily. According to SMM, by April, large and medium-sized enterprises will still have sufficient raw materials and can basically maintain normal production, overseas copper waste exports will be blocked, and the impact of reduced raw material supply on the production of large and medium-sized copper rod enterprises may not gradually appear until late April and May.

From the perspective of expected orders, the starting rate of brass rod enterprises is expected to be 72.47% in April, down 1.47 percentage points from March and 7.18 percentage points from the same period last year. The spread of the overseas epidemic has a greater impact on the export of downstream enterprises of copper rods, such as plumbing and sanitary ware, and copper rod enterprises almost unanimously believe that follow-up orders for copper rods will deteriorate, but large and medium-sized enterprises have not made too many changes in production. Most of them are carried out as planned. It is expected that the overall production and sales of copper rod enterprises will decline only slightly in April and will not fall back significantly. Manufacturers are more worried about May-June.

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