Operating rates at copper pipe producers to extend declines in August

SHANGHAI, Aug 11 (SMM) — Operating rates at Chinese copper pipe producers fell month-on-month in July as orders from air-conditioner manufacturers slid sharply. Many small and medium-scale air-conditioner makers still focused on clearing old inventories, and postponed plans of producing products that meet the new energy efficiency standard. But generally, the copper pipe sector fared better than last year thanks to the continued recovery in the real estate sector.

The average operating rate at copper pipe producers came in at 85.23% in July, losing 4.05 percentage points from June, but gaining 4.99 percentage points from a year earlier, according to an SMM survey of 19 copper pipe producers with total capacity of 2.15 million mt.

The average raw material inventory/output ratio at copper pipe producers stood at 14.11% in July, down 0.89 percentage point on month. Mid-size copper pipe makers saw the sharpest fall in the ratio which slid from 53.68% in June to 43.09% in July. Pessimistic outlook on July consumption and high copper prices drove producers to reduce feedstock inventories.

SMM expects the average operating rate at copper pipe producers to slide 6.11 percentage points on month to 79.12% in August as orders from air-conditioner makers are likely to slide 15% according to their production plans. Besides, export orders are unlikely to improve significantly amid escalating US-China tensions.