[SMM Analysis] Power Cable orders are booming in April the operating rate of copper rods is close to an all-time high

SMM5, 8 March:

The operating rate of copper rod enterprises in April was 83.29%.

According to SMM research data, the operating rate of copper rod enterprises was 83.29% in April, an increase of 23.89% from the previous month and 5.01% from a year earlier. Among them, the operating rate of large enterprises is 84.74%, that of medium-sized enterprises is 52.00%, and that of small enterprises is 18.00%. Similar to the performance of the cable industry, the operating rate of copper rod enterprises rebounded sharply in April from the previous month, with an increase of more than 5 percentage points compared with the same period last year. In April, large enterprises basically reached full production or a relatively high level in history, and more enterprises could not receive orders, but due to the meagre profits of the industry and the lack of willingness to increase production, the production situation of middle and lower enterprises varied, but overall, the copper rod industry had sufficient orders in April, and the output exceeded expectations (research enterprises: 36, production capacity: 8.43 million tons).

The hot order of power cable is the main reason why the operating rate of copper rod is higher than expected. In April, the operating rate of the cable industry exceeded 100%, and the output of a number of large cable factories reached record highs. Orders from the power cable industry improved significantly, but enamelled wire orders were relatively weak. Some of the downstream enamelled wire companies started flat in April, and even expected a decline in May. From the point of view of the order structure, state support for the power industry and stimulus policies for infrastructure are the main reasons for the higher-than-expected operating rate of the cable and copper rod industry. Due to strong demand, copper rod processing fees in all parts of the country rose sharply in April, especially in North China. When the price difference of copper rod processing fees in the region is relatively large, there is even a transfer of goods from East China. Southwest China is also a growth point of copper rod demand in the future. In addition to the stimulation of national infrastructure, the scrap copper rod industry is difficult to produce due to the supply of scrap copper raw materials after the Spring Festival. The effect of refined copper rod replacing scrap copper rod is also one of the reasons for the good performance of copper rod orders.

In addition to consumption factors, some enterprises reported that due to production disruptions in February and March, the backlog of orders was followed by production in April and May, so there will be a concentrated rush from mid to late March to May, and there is uncertainty as to whether new orders can maintain the current high operating rate in June. Downstream export orders for small household appliances and cables lost some orders, but the impact was small, and the impact was relatively more concentrated in May.

In April, the raw material inventory ratio of copper rod enterprises was 8.70%.

In April, the raw material inventory ratio of copper rod enterprises was 8.70%, a decrease of 5.91 percentage points compared with the previous month. In April, the operating rate of copper rods rebounded significantly, and raw material stocks fell further in some areas due to a shortage of electrolytic copper in smelters.

The operating rate of copper rod enterprises is expected to be 80.33% in May.

According to SMM research, the operating rate of copper rod enterprises is expected to be 80.33% in May, down 2.96 percentage points from the previous month and 1.37 percentage points from the same period last year. From the feedback of enterprise orders, May production can basically maintain the performance of April, but due to the decline in enamelled wire orders and the impact of foreign trade exports, the operating rate is expected to decrease slightly from the previous month. In addition, some large enterprises reported that due to the concentrated rush production from late March to April, there will be a temporary shutdown in May to give workers a rest time, which will also affect some production.

(SMM Wei Xue)