Analysis: Operating rates at enamelled wire industry declined in October

SHANGHAI, Nov 16 (SMM)—Operating rates at enamelled wire producers in October stood at 77.95%, down 1.65 percentage points month-on-month and 0.62 percentage point higher than the expected 77.33%, according to the latest SMM survey of 34 producers with total capacity of 1.08 million mt/year. Operating rates stood at 78.50% across big plants, 1.99 percentage points lower on the month; operating rates stood at 77.95% across medium-sized producers, a decline of 0.84 percentage point and at 61.55% across small plants, 4.14 percentage points lower than September.

National Day holidays accounted for the month on month decline in operating rates in October. Orders at enamelled wire producers that mainly serviced home appliances increased after National Day holidays due to the onset of the peak season. Orders from the automobile industry remained high. However, some companies reported that orders from the electric bicycle industry decreased. Orders from the industrial motor and transformer industries were also shrinking, and they expect the order declines to continue until the end of November.

Stringent production restrictions have impacted several enamelled wire companies in Henan since October. Enamelled wire enterprises in Xinxiang city of Henan Province received instructions to suspend production until November 17. The ratio of raw material inventory to total production at enamelled wire producers in October stood at 11.65%, an increase of 0.34 percentage point from September, driven by stockpiling for National Day holidays and concerns over potential gains in copper prices.

Output at most of the enamelled wire companies will rebound in November due to the seasonal factor, but the increase will be insignificant. The overall operating rate in November should be lower than the 79.6% in September, which is the highest operating rate for the year. Orders from industrial motors and electric bicycles will fall and producers in Henan will reduce output due to environmental issues. Significant increase in home appliance output in November will be the driving factor for the increase in orders. Production schedules at major air-conditioning companies in November stood at 10.32 million units, a 10.7% increase from October and a year-on-year increase of 14.6%. We expect operating rates at the enamelled wire industry in November to stand at 78.54%, an increase of 0.59 percentage point from the previous month. Operating rates at small and medium-sized enterprises should rise over 1 percentage point.

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