Copper prices retreat, driving operating rates of copper billet producers up MoM, while YoY performance remains weak amid macroeconomic constraints [SMM Weekly Review of Wire and Cable Market]

       This week (July 4-10), the operating rate of SMM copper wire and cable enterprises stood at 71.52%, up 3.7 percentage points MoM, down 11.69 percentage points YoY, and 3.91 percentage points higher than expected. The performance exceeding expectations was closely related to the demand changes triggered by price fluctuations during the week. According to SMM, the price pullback during the week briefly activated downstream replenishment orders, driving marginal improvement in orders and a MoM increase in the operating rate. However, this was merely a phased demand release, failing to form sustained momentum. The pressure from the overall environment had not been fundamentally alleviated, and YoY data remained weak, with the overall weak pattern remaining unchanged. From the inventory perspective, despite a slight increase in the operating rate, enterprises were less willing to purchase raw materials due to the off-season, relying more on existing inventories to maintain production. This led to a 1.9% MoM decrease in raw material inventories of sampled enterprises this week, reaching 15,470 mt. The tight capital turnover of terminals slowed down the cargo pick-up pace, which in turn drove a slight accumulation of finished product inventories. Finished product inventories increased by 1.98% MoM, reaching 20,060 mt. In terms of industry performance, demand in most fields remained mediocre during the off-season. Only when copper prices pulled back slightly in the latter part of the week did power grid orders and new energy power orders experience a partial recovery, providing some support to the overall operating rate. Affected by the continued off-season, a weak macro consumption environment, and enterprises' cautious attitude towards copper price trends, SMM expects the operating rate of copper wire and cable enterprises to decline by 0.95 percentage points MoM to 70.57% next week (July 11-17), with the YoY decline further widening to 13.57 percentage points.