SHANGHAI, Jan 4 (SMM) - The operating rates of copper wire and cable producers averaged 69.61% in December 2022, down 9.79 percentage points month-on-month and 9.9 percentage points year-on-year. The average operating rates of large, medium-sized and small enterprises were 73.8%, 49.88%, and 38.36% respectively. The average operating rate is estimated to drop to 62.37% in January 2023.
The average operating rate of copper wire and cable companies stood at 69.61% in December, which was far below the estimate.
Most listed companies managed to control the decline in the output and cash flow, but the scrap of the Covid-19 control measures led to a spike in infections. Compared with the previous month, the falling operating rates of terminal enterprises and copper semi processing plants were the root cause of the slump in the average operating rate of copper wire and cable producers. Compared with the previous year, the existing projects of traditional power grid were insufficient, so no sharp improvement was seen in the demand at the end of the year. The new energy grid connection was slowed down under the influence of the Covid-19. The removal of national NEV subsidies prompted consumers to purchase vehicles in advance, which suggests that the demand in 2023 may cool down. The real estate sector remained sluggish amid a severe shortage of capitals and Covid-induced project suspension. The following attention shall be paid to the completion of housing construction as well as the implementation of the policy of "securing the delivery of buildings".
The raw material inventory/output ratio and finished product inventory/output ratio of copper wire and cable companies stood at 19.18% and 25.5% respectively in December.
The changes in the two ratios were limited. As the spread of pandemic increased the financial risks, most copper wire and cable companies maintained relatively low inventory of raw materials and finished products.
The operating rates are estimated to average 62.37% in January 2023, down 7.24 percentage points on the month and 1.05 percentage points on the year.
According to the SMM survey, most companies did not have clear forecast for their operating rates in January owing to the pandemic. In north China, workers have resumed the work after recovery from Covid-19, and the production is gradually back to normal. After the account settlement in December, some enterprises will need to restock in January before the Chinese New Year holiday in order to ensure normal production after. In south China, the pandemic is still rampaging, but the first wave of infections has come to an end with increasing workers back to work. Most companies said that they would take holiday as usual, while a small number of companies said that they planned to have holidays one week earlier. In this case, the average operating rate will slip at a slow pace.