Operating rate of copper wire and cable continues to hit bottom, with finished goods and raw material inventories both declining [SMM Weekly Review of Wire and Cable Market]

       This week (June 20-26), the operating rate of SMM copper wire and cable enterprises stood at 70.18%, down 3.08 percentage points MoM and 12.66 percentage points YoY, falling short of expectations by 1.46 percentage points. The operating rate continued to decline this week due to the current high copper prices suppressing downstream purchase willingness, insufficient order releases, and a lack of new demand points downstream. According to feedback from some enterprises, constrained by fixed-price contracts signed with downstream enterprises in the early stage, they face significant loss risks in executing existing orders after the rise in raw material prices. Therefore, production decisions have become more cautious, with enterprises actively reducing operating rates to avoid operational losses. This week, the operating rate of copper wire and cable enterprises pulled back 12.66 percentage points YoY, mainly due to the postponed consumption caused by high copper prices last year and the lack of new demand after the consumption was released ahead of time following the price limit drop in April this year. From the inventory perspective, with the operating rate under continuous pressure, finished product inventories showed a gradual pullback in tandem. This week, the finished product inventories of sample enterprises reached 20,140 mt, down 4.96% MoM. Raw material inventories also contracted, reaching 16,330 mt, down 5.93% MoM. In terms of industry segments, although structural orders from the new energy sector provided slight support to the operating rate, weak consumption in the construction sector continued to suppress the operating rate of wire and cable enterprises. Given the continued weak terminal consumption and the lack of incremental drivers, SMM expects the operating rate of copper wire and cable enterprises to decline by 2.23 percentage points MoM to 67.95% next week (June 27-July 4), falling short of the same period last year by 13.41 percentage points.