Weekly Operating Rate of Cables Declines for Six Consecutive Weeks Amid Strong Chinese New Year Break Atmosphere [SMM Analysis]

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       This week (1.10-1.16), the operating rate of SMM copper wire and cable enterprises was 60.94%, down 8.37 percentage points WoW, 11.04 percentage points lower YoY (24.1.12-24.1.18), and 2.37 percentage points below the expected operating rate. According to SMM, most enterprises saw workers gradually returning to their hometowns this week, and the weakening of orders from end-user enterprises became more evident. Only a few enterprises reported receiving orders from previously awarded power company contracts, which led to increased production and a rebound in copper usage compared to last week. However, most enterprises in the industry have gradually entered holiday mode. In terms of holiday duration, wire and cable enterprises this year are taking 11-16 days off, with South China leading the nation in holiday length. Additionally, due to limited growth in new orders before the Chinese New Year, many wire and cable enterprises have extended their holiday period by 1-3 days compared to last year.

Data Source: SMM

       This week, raw material inventories of sampled copper wire and cable enterprises increased 0.33% WoW to 21,070 mt, while finished product inventories rose 10.57% to 18,410 mt. Some enterprises within the sample replenished their regular inventories and stockpiled ahead of the Chinese New Year, leading to a noticeable increase in finished product inventories.

       SMM expects the operating rate of copper wire and cable enterprises to drop by 22.84 percentage points to 38.1% next week (1.17-1.23), 20.63 percentage points lower than the same period in previous years but 4.1 percentage points higher than the week before last year’s Chinese New Year. Next week marks the final week before the Chinese New Year, and wire and cable enterprises will officially begin their holidays starting from the 20th, resulting in a significant decline in operating rates. According to SMM, many wire and cable enterprises currently hold a cautious outlook on post-holiday orders. Although most enterprises will resume work on February 5, actual recovery will take time as non-local employees gradually return. It is expected that enterprises will only slowly return to normal levels after the Lantern Festival.