Copper Pipe Operating Rate Dragged by Off-Season in September, Improves in October as Peak Season Approaches [SMM Analysis]

In September, the operating rate of copper pipe enterprises was 65.35%.

According to the SMM survey, the operating rate of copper pipe enterprises in September was 65.35%, down 0.08 percentage points MoM and 1.15 percentage points YoY. (Survey sample: 23 companies, sample capacity: 2.51 million mt) September remained an off-season for copper pipes, with most companies reporting insufficient orders and unsatisfactory YoY performance. Observing air conditioner production schedules, domestic sales in September continued to decline significantly YoY, while exports showed strong growth but had limited impact on overall orders in the copper pipe industry. Only orders for air conditioner pipes from large mainframe manufacturers remained stable, with some catch-up orders at the end of September due to rising copper prices. Therefore, the National Day holiday had little impact on the operations of medium and large copper pipe enterprises, with some medium-sized enterprises initially planning a 3-5 day holiday but actually taking only 2-3 days off. Small and medium-sized copper pipe enterprises showed significant divergence; some saw growth in September due to new business expansion, while others experienced a MoM decline, citing limited air conditioner pipe orders and a significant YoY weakening, with no support from export orders. The alloy pipe market maintained stable operations, with National Day holidays 1-2 days longer than those of air conditioner pipe companies. Brass pipes and white copper pipes continued to diverge; brass pipes were affected by the home decoration and bathroom sectors, showing mediocre performance, with slight growth in exports; white copper pipes, related to the military industry, saw stable and improving orders.

In September, the raw material inventory ratio of copper pipe enterprises was 3.97%.

The raw material inventory ratio of copper pipe enterprises in September was 3.97%, up 0.09 percentage points MoM. Due to the Mid-Autumn Festival holiday, copper pipe production slightly decreased compared to August, but inventory increased MoM due to pre-holiday stocking for the National Day, leading to a higher overall raw material inventory ratio.

The operating rate of copper pipe enterprises is expected to be 67.43% in October.

According to SMM data, the operating rate of copper pipe enterprises is expected to be 67.43% in October 2024, up 2.09 percentage points MoM and down 0.96 percentage points YoY. Although there is a National Day holiday in October, air conditioner production schedules have been revised upwards. According to ChinaIOL's October production schedule, domestic air conditioner production is expected to grow by 5.2% YoY, and exports by 51%. The significant growth in exports has led to an upward adjustment in order expectations for large copper pipe factories, and actual operations in October may exceed expectations.