This Week's Copper Prices Rose, Hindering the Resumption of Production for Copper Wire and Cable Enterprises [SMM Analysis]

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       This week (2.7-2.13), the operating rate of SMM wire and cable enterprises reached 57.11%, up 29.75 percentage points WoW but still 8.18 percentage points lower YoY, and 8.23 percentage points higher than the expected operating rate. According to SMM, most wire and cable enterprises are still in the process of resuming production, with workers yet to fully return to their posts. Despite the significant increase in the operating rate, many enterprises indicated that this year's recovery pace is slower than in previous years, mainly due to the unexpected post-holiday rise in copper prices, which has dampened procurement enthusiasm amid incomplete recovery in downstream demand. From the demand side, the downstream market is also gradually recovering, with current new orders primarily coming from the power sector, while infrastructure and real estate construction projects have yet to resume, resulting in almost no new orders. Regionally, the recovery in the northern market is slower than in the south China market due to cold weather.

       Data Source: SMM

       This week, the raw material inventory of wire and cable enterprises recorded 19,470 mt, down only 0.21% WoW, as high copper prices reduced enterprises' willingness to procure raw materials. Meanwhile, finished product inventories recorded 17,680 mt, down 3.44% WoW, as enterprises mainly focused on digesting finished product inventories this week.

       Although the Lantern Festival has passed and workers are expected to fully return to their posts next week, the current high copper prices and significant macro uncertainties have made downstream customers cautious in placing orders. Therefore, most wire and cable enterprises expect the market recovery pace to slow next week, with only rigid demand orders remaining in the market. SMM predicts that next week (2.14-2.20), the operating rate of wire and cable enterprises will increase by 11.67 percentage points WoW to reach 68.78%.