Operating Rate of Copper Wire and Cable Slightly Increased MoM, Wire and Cable Enterprises Experienced Passive Inventory Buildup [SMM Wire and Cable Market Weekly Review]

      This week (September 5-11), the operating rate of SMM copper wire and cable enterprises was 67.62%, up 0.87 percentage points MoM, down 29.37 percentage points YoY, and 0.13 percentage points below expectations. The slight increase in the operating rate was mainly driven by regular production schedules and the stimulation of downstream enterprises placing orders to restock, as copper prices fell below 80,000 yuan/mt at the beginning of the week, boosting optimism about future prices. By industry, orders from the automotive sector remained generally stable, while the release of power grid orders slowed down, with most enterprises expecting significant progress only by October. Other industries remained in the off-season, showing no signs of recovery. Inventory-wise, as copper prices continued to fluctuate at highs, enterprises primarily made just-in-time procurement. The raw material inventory/output ratio of sample enterprises rose 0.96 percentage points to 14,690 mt this week. Finished product inventories accumulated for the fourth consecutive week, with the finished product inventory/output ratio increasing 1.09 percentage points to 20,360 mt. Due to financial constraints among downstream enterprises, cargo pick-up continued to slow down, leading to rising accounts receivable for wire and cable enterprises. Currently, new orders in the market are limited, and most transactions are conducted with payment terms and acceptance bills. Enterprises generally face the dilemma of "screening orders means having no orders to fulfill," passively accepting increased finished product inventories. To control repayment risks, most enterprises strictly adhere to the strategy of "no shipment without payment." Looking ahead to next week, copper prices are expected to continue hovering at highs, with no new demand support. The market overall is expected to remain stable in the off-season. Therefore, SMM expects the operating rate of copper wire and cable enterprises to slightly decline to 67.5% next week (September 12-18).