Enamelled Wire: High Copper Prices Constrain Demand, Operating Rates Struggle to Match Year-Ago Levels

According to SMM, the comprehensive operating rate of the enamelled wire industry in October was 64.47%, down 3.65 percentage points MoM and 0.75 percentage points YoY. Among them, the operating rate of large enterprises was 64.15%, medium-sized enterprises was 65.34%, and small enterprises was 64.18%.

In October, the operating rate of the enamelled wire industry unexpectedly declined by 3.56 percentage points, falling short of the levels seen in the same period in previous years. Specifically, on one hand, weak end-use demand combined with the impact of the National Day and Mid-Autumn Festival holidays led to an increase in the number of holidays taken by enterprises and downstream customers compared to last year, with extended durations directly dragging down the monthly operating rate. On the other hand, after the holidays, copper prices rose more than expected, and end-user enterprises showed low acceptance of finished product price increases driven by rising raw material costs, resulting in delayed progress on previous orders, hindered release of new orders, and a lack of the typical peak season effect for the industry.

Amid high copper prices in October, enamelled wire enterprises generally adopted a business strategy of "producing based on demand and controlling inventory," aiming to reduce the scale of finished product inventories. However, constrained by persistently weak end-use demand, inventory destocking pressure remained significant, and overall finished product inventories stayed at high levels. By month-end, the days of inventories for finished products stood at 12.53 days (Days of Inventories = Finished Product Inventory / Monthly Production × Days in the Month).

SMM expects the comprehensive operating rate of the enamelled wire industry to rebound to 68.73% in November, up 4.26 percentage points MoM from October, but still down 0.31 percentage points YoY. In terms of the rebound drivers, as the impact of the National Day holiday gradually subsides, the industry's production pace returns to normal, serving as the main factor boosting the operating rate. However, demand-side performance is mixed: sustained growth in orders from the NEV and power transformer sectors provides some boost to the operating rate, but orders from the home appliance sector show no significant improvement, two-wheeler orders have weakened, and the suppressive effect of high copper prices on overall demand persists. Notably, copper price trends in November will be a key variable affecting industry orders, directly influencing the procurement decisions of end-user enterprises and simultaneously impacting the pace and scale of order releases.