Multiple factors have put pressure on the industry, with the operating rate of brass billet producers continuing to decline to 55% [SMM Weekly Review of Brass Billet Market]

According to SMM data, the operating rate of brass billet enterprises was 55.03% this week, down 2.37 percentage points MoM, indicating clear signs of an early off-season. According to enterprise feedback, new orders for brass billets remained weak this week, particularly in the connector sector, where orders decreased by approximately 15% YoY. In the new energy sector, order volume fell by around 10% YoY. Currently, enterprises are mainly relying on backlog orders from earlier periods to sustain production. However, most enterprises reported that orders on hand can only meet production needs for 2-3 weeks. From an inventory perspective, the industry as a whole maintains a strategy of operating with low inventory levels. Raw material inventory decreased by 0.37 days MoM to 5.3 days, while finished product inventories fell by 1.19 days MoM to 7.18 days, though they remain above healthy inventory levels.

Looking ahead to next week, multiple factors will exacerbate pressure on enterprises: on the supply side, raw material supply remains tight, and procurement costs for raw materials remain high, further squeezing enterprise profit margins; on the demand side, downstream orders continue to be weak, with some sectors already reducing their production schedules; and seasonally, the Dragon Boat Festival holiday and the June off-season will intensify the supply-demand imbalance. Therefore, SMM expects the operating rate of brass billet enterprises to continue its downward trend next week, decreasing by 2.63% MoM to 52.4%.