July Copper Pipe Industry Entered Off-Season Early, but August Operating Rate Is Expected to Show YoY Growth [SMM Analysis]

The operating rate of copper pipe enterprises in July was 72.66%

According to the SMM survey, the operating rate of copper pipe enterprises in July was 72.66%, down 4.11 percentage points MoM and down 8.00 percentage points YoY. (Survey sample: 23 enterprises, sample capacity: 2.51 million mt; SMM excluded a small copper pipe factory in Jiangsu with an annual capacity of 4,800 mt and adjusted the capacity of a copper pipe factory in north-west China from 32,500 mt to 15,000 mt.) The copper pipe industry entered the off-season earlier in July 2024 compared to 2023, but the actual operating rate in July was higher than expected mainly due to continued strong exports despite a cooling domestic market. Meanwhile, many regions experienced high temperatures in July, leading to active demand in the air conditioning installation market and a surge in orders for installation pipes. Under macroeconomic factors, copper prices fell significantly in July, dropping below 80,000 yuan/mt, giving small and medium-sized enterprises a breather and allowing some to increase orders, thereby narrowing the decline in the operating rate of copper pipe enterprises. In the alloy pipe market, some factories saw a slight decline in production due to the hot weather, but order volumes remained stable, with production expected to gradually recover after late August. Additionally, orders for military alloy pipes remained positive, but due to limited enterprise capacity, monthly production was relatively balanced.

The raw material/output ratio of copper pipe enterprises in July was 3.75%

The raw material/output ratio of copper pipe enterprises in July was 3.75%, up 0.02 percentage points MoM. Copper prices fell in July. Copper pipe orders decreased as the off-season approached, leading enterprises to restock copper cathode as needed, resulting in only a slight change in the raw material/output ratio compared to the previous month.

The operating rate of copper pipe enterprises in August is expected to be 69.43%

According to SMM data, the operating rate of copper pipe enterprises in August 2024 is expected to be 69.43%, down 3.23 percentage points MoM but up 0.08 percentage points YoY. According to ChinaIOL data, the scheduled production for key air conditioning enterprises in August shows a 15.9% YoY decline in production for domestic trade compared to 2023, while production for exports is expected to grow by 35.1%. Driven by strong exports, the operating rate of copper pipes in August is expected to show growth compared to the same period in 2023, with a moderate MoM decline from July.