How will demand for copper from wire and cable producers recover after copper prices dropped from highs?

SHANGHAI, Mar 4 (SMM)—Prices of copper, aluminium and PVC, major raw materials of wire and cable, surged after the Chinese New Year (CNY) holiday, causing panic in the market. The most-traded SHFE 2104 copper contract soared by more than 5% on the first trading day after CNY and rose by its daily limit on February 22. The most-active PVC contract on Dalian Commodity Exchange also increased by about 1,600 yuan/mt since the beginning of February. Rising raw materials prices and tepid consumption pressured cable producers. When will wire and cable consumption return to the level of a high season?  

An SMM survey showed that operating rates at wire and cable producers are likely to stand at 68% in March, down 7% from a year ago. Although producers were bullish on March consumption, orders at their hands slid significantly year-on-year.  

Copper prices that fluctuated vigorously kept downstream users of wire and cable on the sidelines. Orders at wire and cable makers rose slightly last week as copper prices dropped from highs. 

Shrinking orders at the State Grid and China Southern Power Grid also weakened their demand for copper.  

Besides, fewer new projects at downstream engineering companies prompted them to reduce procurements of wire and cable.

Consumption of wire and cable is expected to improve from late March after copper prices end the period of consolidation.