Off-season characteristics emerge, operating rate of enamelled wire industry declines [SMM analysis]

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      According to SMM, the composite operating rate of the enamelled wire industry in May was 72.26%, down 4.53 percentage points MoM and up 3.22 percentage points YoY.Among them, the operating rate of large enterprises was 74.91%, that of medium-sized enterprises was 67.16%, and that of small enterprises was 70.88%.

       The operating rate of the enamelled wire industry in May pulled back as expected, but the decline was smaller than anticipated.Specifically: Firstly, the Labour Day holiday altered the industry's production rhythm, with some enterprises taking holidays or implementing production cuts, directly lowering the overall operating rate for the month. Secondly, the inhibitory effect of the tariff hike policy on market consumption demand gradually emerged, leading to a decline in end-use demand and a continuous drop in new orders for the enamelled wire industry. Even with the temporary suspension of the tariff hike policy, it was difficult to make up for the losses incurred earlier. Additionally, the sustained high copper prices and the low purchasing sentiment of downstream buyers, coupled with the arrival of the traditional off-season for the industry, further weakened market order demand. However, the decline in the operating rate was narrower than the forecasted value. This was because most enterprises had sufficient order volumes in April, and even with a sharp drop in new orders in May, they were still busy scheduling production for the backlog orders from April, enabling the operating rate to remain at a relatively high level, thereby effectively buffering the decline in the operating rate.

       In May, the raw material inventory/output ratio of enamelled wire enterprises was 12.08%, up 0.7 percentage points MoM, and the finished product inventory/output ratio was 33.36%, up 3.17 percentage points MoM.The finished product inventories of enamelled wire enterprises increased in May, mainly due to the recent poor order performance. However, the current total inventory level was still within the normal historical fluctuation range.

       The enamelled wire industry officially entered the traditional consumption off-season in June, with industry orders remaining sluggish recently. According to SMM, the current downstream demand is showing a significant contraction, with particularly notable declines in demand from major application areas such as industrial motors and home appliance panels.Enamelled wire enterprises generally reported that the order volume in June is expected to decline by more than 10% MoM, and some enterprises have already responded to market changes by controlling inventory and adjusting production rhythms.SMM's forecast data indicates that the operating rate of the enamelled wire industry in June is expected to be 67.76%, down 4.5 percentage points MoM, with a YoY decline of 0.89 percentage points.