Enamelled Wire: High Copper Prices Suppress Operating Rates, Resulting in Year-on-Year and Month-on-Month Declines in December

According to SMM, the comprehensive operating rate of the enamelled wire industry in December was 66.28%, down 1.63 percentage points MoM and down 6.32 percentage points YoY. Among them, the operating rate of large enterprises was 70.22%, that of medium-sized enterprises was 55.27%, and that of small enterprises was 66.59%.

The operating rate of the enamelled wire industry in December failed to rebound as expected, showing a pullback both YoY and MoM, with the unexpected surge in copper prices being the core factor suppressing the operating rate. Meanwhile, against the backdrop of high copper prices, enterprises intensified risk management of accounts receivable at year-end, further constraining their willingness to expand production. Coupled with the impact of environmental protection policies on some enterprises in Henan, which forced a slowdown in production pace, the industry's operating performance remained weak under multiple pressures.

In terms of finished product inventories, the days of inventories for the enamelled wire industry rose to 12.78 days in December, up 0.96 days MoM. Affected by the continuous surge in copper prices, the cargo pick-up pace of downstream enterprises slowed down significantly, and the industry's finished product inventories are currently at a relatively high level for this period.

SMM expects the comprehensive operating rate of the enamelled wire industry in January to increase slightly by 0.56 percentage points MoM to 66.84%, up 5.37 percentage points YoY. The YoY growth is mainly attributed to seasonal disruptions caused by the earlier Chinese New Year holiday last year compared to this year. According to actual survey findings, with copper prices exceeding 100,000 yuan/mt, end-use demand has been severely suppressed: industry new orders were scarce in the first week after New Year's Day. Although market rigid demand remains sufficient, the selling prices of some downstream customers are already far below the cost line. Under the pressure of losses, wait-and-see sentiment is strong, making it difficult for enamelled wire enterprises to realize their production expansion intentions despite their willingness. There are even reports that some small downstream motor plants have begun planning for the Chinese New Year holiday. Analyzing the structure of end-use demand, orders from the new energy sector remain stable, while order demand from home appliance customers continues to improve, with these two segments becoming the core support for industry orders. SMM believes that market rigid demand is largely suppressed by high prices and temporarily delayed in release. If copper prices experience a significant pullback in the future, industry orders are expected to see notable improvement, and the potential for a rebound in the operating rate will further expand.