In December, Copper Wire and Cable Operating Rate Declined Under Pressure, While Soaring Copper Prices Hampered Downstream Demand Release

According to SMM, the operating rate of copper wire and cable was 68.89% in December this year, down 3.41 percentage points MoM, a decrease of 9.46 percentage points YoY, and 5.15 percentage points lower than forecast. Among them, the operating rate of large enterprises was 73.05%, medium-sized enterprises was 52%, and small enterprises was 50.16%.

Specifically, the operating rate of copper wire and cable enterprises declined MoM in December, with the core driving factor being intensified and persistently high copper price fluctuations during the month, which significantly dampened downstream purchasing sentiment. The market exhibited clear divergence this month: in the early part of the month, when copper prices were rising, downstream acceptance remained relatively high, and essential demand orders effectively offset operational pressure; in the latter half of the month, as copper prices continued to break new highs, the price inversion phenomenon for orders on hand at wire and cable enterprises expanded significantly, compounded by weak downstream purchase willingness, further increasing operational pressure. By sector demand, the surge in copper prices led to generally weak orders across various fields. Orders in the automotive industry, which had previously shown stable demand, declined, while procurement from the two grid companies also remained at essential demand levels only.

From the perspective of wire and cable enterprise inventories, raw material inventories reached 39,584 mt in December, with the raw material inventory/output ratio increasing by 0.53 percentage points MoM. The primary reason was the continued surge in copper prices, prompting enterprises to focus on just-in-time procurement and place orders based on order pace while locking in copper prices. Finished product inventories reached 54,050 mt, with the finished product inventory/output ratio rising by 1.44 percentage points MoM. This was mainly due to year-end financial constraints among downstream end-users, which slowed cargo pick-up and led to inventory buildup of finished products.

According to SMM forecasts, the operating rate in the copper wire and cable industry is expected to increase by 1.88 percentage points MoM to 70.77% in January. Most enterprises took only 2–3 days off during the New Year's Day holiday, causing limited disruption to the industry. Currently, end-users have started placing orders but have not yet locked in prices, primarily because downstream players widely expect copper prices to have room for a correction at the beginning of the year. Even if the correction is limited, they consider current prices to be at high levels, leading some just-in-time procurement orders to be postponed until January for release.