Sales promotions this week drove the operating rate to rebound, but market demand is gradually weakening [SMM Weekly Review of Wire and Cable Market]

       This week (6.6-6.12), the operating rate of SMM copper wire and cable enterprises was 76.31%, up 0.22 percentage points MoM and 0.4 percentage points YoY, exceeding the forecast by 1.48 percentage points. The slight increase in the operating rate this week was mainly due to some enterprises actively introducing sales promotions to boost customers' purchase willingness in response to the pressure of weakening downstream demand, thereby driving their own operating rates to rebound beyond expectations. However, the operating rates of most enterprises still showed a downward trend, with the core constraint being that the weakening trend of end-use demand had not yet been fundamentally improved. This week, the finished product inventories of the sampled enterprises reached 22,310 mt. Although most enterprises adopted a "produce based on sales" strategy to flexibly adjust their production pace and effectively manage finished product inventories, the continuous sluggishness of downstream cargo pick-up led to a 1.13% MoM increase. Meanwhile, raw material inventories reached 17,090 mt, up 2.77% MoM. Affected by the copper price correction during the week, some enterprises carried out strategic small-scale raw material restocking operations. Observations across industries based on feedback from most enterprises showed that the order demand from the State Grid Corporation of China and China Southern Power Grid still demonstrated strong resilience, and the demand for offshore wind power projects was also relatively stable. Overall, despite some enterprises currently implementing sales promotions to boost operating rates, they still struggled to withstand the pressure of gradually weakening end-use demand. Therefore, SMM expects that next week (6.13-6.19), the operating rate of copper wire and cable enterprises will decline by 0.53 percentage points MoM to 75.77%, 4.64 percentage points lower than the same period last year.