This week, both the operating rate of copper wire and cable production declined. With high copper prices and the off-season, a further decline is expected next week [SMM Weekly Review of Wire and Cable Market]

       This week (July 18-24), the operating rate of SMM copper wire and cable enterprises was 70.83%, down 2.07 percentage points MoM and 15.28 percentage points YoY, falling short of expectations by 1.14 percentage points. The significant expansion of the YoY decline to 15 percentage points stems from the contrast between the rebound in orders driven by the decline in copper prices YoY last year and the notably weaker overall demand this year compared to last year. Specifically, the core reason for the decline in the operating rate this week was that the rise in copper prices suppressed downstream purchase sentiment. Coupled with the industry entering the off-season and a reduction in orders, most enterprises could only rely on long-term contracts in hand from earlier periods to maintain basic operations. Inventory levels also adjusted synchronously: affected by the high copper prices and slower reimbursements after the peak season for wire and cable enterprises in Q2, enterprises faced financial constraints, leading to a sluggish willingness to purchase raw materials. As a result, the raw material inventory of sampled enterprises decreased by 5.63% MoM this week, reaching 15,090 mt. Meanwhile, finished product inventories decreased by 2.35% MoM this week with the decline in operations, reaching 19,540 mt. From an industry perspective, the off-season combined with copper prices fluctuating at highs led to orders in various industries falling short of expectations. Overall, it is difficult to improve the sluggish consumption during the demand off-season, and the suppressive effect of high copper prices on consumption is evident. Therefore, SMM expects the operating rate of copper wire and cable enterprises to decline by 0.53 percentage points MoM to 70.30% next week (July 25-31), with the YoY decline further expanding to 21.2 percentage points.