Recovery of Copper Consumption after CNY Holiday Was Slow, and the Operating Rates at Copper Rod Producers in February Were less than Expected

SHANGHAI, Mar 11 (SMM) - Operating rates at copper rod producers using copper cathode as raw material fell 9.83 percentage points on the month but rose 5.8 percentage points on the year to 46.42% in February, according to an SMM survey of 46 producers with a total capacity of 12.40 million mt/year. The operating rates of large, medium-sized, and small enterprises were 46.01%, 47.26%, and 46.5% respectively.

Operating rates at copper rod producers declined 9.83 percentage points on the month in February, which was less than expected. According to SMM, high copper prices after the CNY holiday aroused the strong wait-and-see sentiment in downstream and suppressed the downstream purchasing. In addition, the construction of the real estate, infrastructure, and other projects resumed operation late after the CNY holiday, resulting in a light demand for downstream wires and cables. Moreover, wire and cable companies’ demand for copper rods significantly reduced because their resumption of production was relatively late and the new orders decreased. The enamelled wire orders grew slowly after the CNY holiday, which aroused inactive operating rates at enterprises. Sluggish demand for copper rods in downstream since the CNY holiday resulted in relatively high finished product inventory in many copper rod enterprises. Thus, the output and sales of copper rods declined. Besides, after the CNY holiday, sporadic outbreaks of the pandemic in many regions of China affected consumption and transportation to a certain extent.

Raw material inventory/output ratio at copper cathode rod enterprises was 8.89% in February

The raw material inventory/output ratio of copper cathode rod enterprises was 8.89% in February, an increase of 1.54 percentage points from the previous month. According to the research, due to the high copper prices, the enterprises are relatively cautious in purchasing raw materials to keep their inventory in rigid demand. The low monthly production is the main reason for the increase in raw material inventory MoM.

Operating rates at copper cathode rod enterprises will be 65.97% in March

Operating rates at copper rod producers are expected to rise 19.55 percentage points month-on-month to 65.97% in March. Although the consumption was curbed by the huge fluctuation of copper prices, SMM presumes that the copper consumption will be better in March along with the increased demand for copper rods in downstream wire and cable companies in the traditional peak season in March.