H1 Enamelled Wire Industry Orders Exceeded Expectations—Supported by "White Goods" [SMM Analysis]

In H1, copper prices hit a historic high, negatively impacting the operating rate of the copper processing industry, especially the wire and cable sector, where orders and operating rates were both lower than the same period in previous years. However, the enamelled wire industry was relatively less affected. Despite high copper prices, enamelled wire companies still performed well in terms of orders. What are the reasons behind this?

According to SMM, household appliances and power equipment are the main downstream applications of enamelled wire, accounting for over 60% of its consumption. The growth in orders from these two sectors is the main reason for the good performance of the enamelled wire industry in H1. This article briefly analyzes the impact of the white goods market on the enamelled wire industry in H1.

In H1, air conditioning companies shifted to the export market due to sluggish domestic sales, and household air conditioner exports showed unexpected growth. According to ChinaIOL monitoring, in June 2024, household air conditioner production reached 18.386 million units, up 4.6% YoY; sales were 18.94 million units, up 3.6% YoY. Domestic sales were 10.568 million units, down 15.8% YoY; exports were 8.372 million units, up 46.1% YoY.

Boosted by the home appliance trade-in policy and the continued high demand in the export market, leading air conditioning companies significantly increased their scheduled production in H1. From the scheduled and actual production of key air conditioner enterprises, the cumulative production from January to June was 112.18 million units, up 15.7% YoY. As an essential raw material in air conditioner compressors, enamelled wire orders increased accordingly.

The home appliance trade-in policy also boosted the production and sales of refrigerators and washing machines. According to NBS data, the cumulative production of refrigerators nationwide from January to June was 50.51 million units, up 9.7% YoY; the cumulative production of washing machines was 53.116 million units, up 6.8% YoY. In terms of exports, from January to June 2024, China exported 16.22 million washing machines, up 22.8% YoY; and 39.8 million refrigerators, up 25.6% YoY. The excellent performance in the production and sales of refrigerators and washing machines led to a rapid increase in enamelled wire orders, as it is an indispensable raw material in refrigeration compressors and motors.

The prosperity of the home appliance market is closely related to the enamelled wire industry. In H1, the enamelled wire market was supported by the strong production and sales of white goods, resulting in good order performance. Looking ahead to H2, the home appliance industry is currently in the off-season, and leading air conditioning companies have started their high-temperature holidays, significantly affecting enamelled wire orders. SMM expects the enamelled wire market to perform flat in Q3 due to the off-season, with a downward trend in the industry's operating rate. From the perspective of H2 home appliance consumption expectations, domestic market consumption remains weak due to the real estate and economic environment. However, the government's fiscal subsidy policy for home appliance trade-in may drive some growth in domestic sales. In terms of exports, under the background of energy-saving and emission reduction policies in Southeast Asia, the market outlook for China's home appliance exports remains optimistic, especially for air conditioning products, which will continue to perform strongly in the Southeast Asian market. Therefore, the home appliance industry in Q4 is still optimistic.