Operating rates at brass billet plants fell further in July

SMM adjusted the survey samples of copper billet plants in August 2023. The sample production capacity expanded from 1.187 million mt/year to 1.32 million mt/year, the sample share increased from 40% to 44%, and the number of enterprises stood at 23. The operating rates of brass billet producers averaged 64.82% in July, down 1 percentage point month on month due to poor demand in the off-season, SMM survey showed. Orders will unlikely increase in August. The average operating rates of large, medium-sized and small enterprises stood at 66.76%, 64.03%, and 33.33%, respectively. (Notes: SMM surveyed 23 producers with a total capacity of 1.32 million mt/year.)

According to SMM, the demand in the domestic market was not strong in July, and some air-conditioning workshops in Guangdong shut down, weakening the support for copper billet demand. Overseas demand was also poor. At present, only the demand from new energy is acceptable, but that can hardly boost the copper billet market significantly due to the small share in total demand and high quality requirements. In addition, copper billet factories reported reduced profit or losses as overseas brass scrap prices exceeded domestic prices. Most of the brass scrap was purchased from overseas markets.

The operating rates of brass billet producers are expected to average 63.27% in August, down 1.6 percentage points month on month, SMM survey showed.

Copper billet companies still lack confidence in orders in August. Most copper billet companies believe that domestic and overseas demand will not improve significantly in August. Meanwhile, many downstream users will use other products to replace copper billets in order to reduce cost. SMM understood that sanitary companies in some areas have begun to use stainless steel and other materials to replace copper billet to reduce costs, and there have been some connector producers using iron instead of copper billet and wires. While lowering processing fees, many copper billet factories have begun to develop new products or explore upstream and downstream products in the industrial chain. Only some large-scale enterprises still have their own advantages to maintain relatively stable orders, while most small and medium-sized enterprises have experienced a significant decline in output. The output is expected to continue the downward trend in August, which is unlikely to improve before the fourth quarter.