Copper Prices Remain High, Growth of New Orders for Copper Wire and Cable Enterprises Slows Down [SMM Analysis]

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       This week (February 14 to February 20), the operating rate of SMM copper wire and cable enterprises reached 70.08%, up 12.97 percentage points from last week, though the growth rate slowed. Compared to the same period last year on the lunar calendar, the operating rate decreased by 12.6 percentage points, and it was only 1.3 percentage points higher than the expected operating rate. According to SMM, the current high copper prices have significantly suppressed market demand, with only a small number of channel customers exhibiting "rush to buy amid continuous price rise" behavior, while most customers reported a noticeable slowdown in new orders this week. From an industry perspective, medium- and low-voltage orders in the real estate and infrastructure sectors were particularly weak, with almost no growth in new orders. The slow resumption of engineering projects has limited the increase in orders for wire and cable enterprises. SMM only heard that some enterprises reported moderate performance in PV and instrumentation control orders, while orders from the two power grids maintained a normal pace without significant changes.

Data Source: SMM

       This week, raw material inventories of copper wire and cable enterprises recorded 18,410 mt, down 5.44% MoM. With high copper prices and weak new order performance, enterprises reduced raw material procurement to minimize capital occupation. Finished product inventories of copper wire and cable enterprises recorded 17,425 mt this week, down 1.44% MoM, indicating a slow pick-up pace in the end-use market.

       Currently, copper prices and demand are the two key factors affecting the growth of copper wire and cable enterprises. On one hand, high copper prices suppress downstream demand, leaving only just-in-time procurement in the market. On the other hand, enterprises remain skeptical about the total market demand this year. Although orders from the two power grids may remain stable or slightly increase, orders in the real estate and infrastructure sectors are unlikely to reverse their weak trends. The PV market, being relatively saturated, may also limit order growth this year. Overall, enterprises lack confidence. SMM expects the operating rate of copper wire and cable enterprises to increase by only 8.31 percentage points to 78.39% next week (2.21-2.27).