According to SMM, the operating rate of domestic copper wire and cable enterprises was 81.38% in May this year, up 0.07 percentage point MoM and 13.48 percentage points YoY, which was 3.28 percentage points lower than the expected operating rate. Among them, the operating rate of large enterprises was 87.17%, that of medium-sized enterprises was 60.4%, and that of small enterprises was 49.65%.
Specifically, the operating rates of SMM copper wire and cable sample enterprises showed mixed performance in May. Some enterprises were able to maintain their operating rates in May due to the accumulation of a large number of orders on hand during the sharp decline in copper prices in April, while others struggled to achieve the same performance, with their operating rates showing a downward trend on a MoM basis. In terms of the performance of new orders in May, influenced by the combined effects of market orders being released in advance in April, the Labour Day holiday, and persistently high copper prices, most enterprises experienced a decrease in new orders both YoY and MoM. Multiple enterprises indicated to SMM that the value and physical content of their new orders in May declined by 10-20% YoY, which would drag down their production in June. By sector, SMM only heard that orders from the two power grids, new energy vehicle (NEV) related orders, and wind power related orders were relatively stable; construction projects such as real estate and infrastructure showed regional differentiation; and orders for petroleum and petrochemical projects were relatively significant.
From the inventory perspective, in May, the raw material inventory of SMM copper wire and cable enterprises reached 45,797 mt, with a raw material inventory/output ratio of 18.54%, down 1.01 percentage points MoM. The finished product inventory stood at 54,490 mt, with a finished product inventory/output ratio of 22.06%, up 1.4 percentage points MoM. Currently, enterprises are cautious about raw material procurement, while downstream enterprises are equally cautious about cargo pick-up.
According to SMM, the operating rate of the copper wire and cable industry is expected to decline by 3.91 percentage points MoM to 77.47% in June, which is 5.82 percentage points higher than the same period last year. As June arrives, the traditional peak season will gradually come to an end. Although SMM has learned that some companies plan to launch sales promotions in June, with production and sales expected to increase MoM, it will ultimately be difficult to offset the overall weakening trend in industry demand. By sector, the power grid and NEV sectors are expected to remain stable, with no significant growth prospects for orders in the real estate and infrastructure sectors. Meanwhile, due to policy impacts, PV sector orders have gradually weakened. Companies have indicated that there are few growth points in end-use demand, so the operating rate in June is expected to decline.
