Weak demand coupled with cost pressure continued to drive down the operating rate of brass billet producers in May [SMM analysis]

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       According to SMM data, the operating rates of copper billet producers reached 50.61% in May 2025, down 4.36% MoM, indicating a weakening trend in the industry. By scale, the operating rate of large enterprises was 53.42%, that of medium-sized enterprises was 49.54%, and that of small enterprises was 35.87%.

       Market Review in May: Weak Demand and Slow Inventory Drawdown

       After the Labour Day holiday, the early onset of the off-season was evident. Most enterprises reported that the actual downtime during the holiday increased by about 1 day compared to last year. Coupled with the sustained highs in raw material prices, the willingness of end-users to restock decreased, and they only made just-in-time procurement, leading to a significant reduction in demand for brass billets. The days of raw material inventories of SMM's sample enterprises in May decreased by 0.5 days MoM to 6.98 days, and the days of finished product inventories also decreased slightly by 0.3 days MoM to 8.68 days. Despite enterprises' proactive efforts to reduce inventories, the drawdown speed of finished product inventories remained slow amid weak demand, with some enterprises still facing high inventory pressure.

       Outlook for June: Operating Rates May Continue to Decline, Industry Competition Intensifies

       SMM expects the operating rate of copper billet producers to further decline to 47.11% in June, down 3.51 percentage points MoM. As the traditional off-season deepens, market demand is expected to continue to contract, and enterprises are generally pessimistic about order expectations in June. In particular, order growth in traditional application areas is sluggish, and the phenomenon of "cut-throat competition" in the industry is intensifying. Some enterprises are resorting to sales promotions to stimulate orders, but the effect is limited, and finished product inventories remain high.

       In addition, the current high copper prices are further suppressing downstream procurement demand. Against the backdrop of high raw material costs and tight supply, enterprises are adopting a more cautious restocking strategy, mainly operating with low inventories. SMM analysis suggests that enterprises' raw material inventories may continue to decline in June, while finished product inventories are unlikely to see significant improvement, and the industry will still face significant pressure in the short term.