According to SMM data, the composite operating rate of copper bar enterprises in February was 22.78%, down 22.08 percentage points MoM and down 17.64 percentage points YoY. The operating rate of large enterprises was 24.11%, medium-sized enterprises 23.32%, while small enterprises were only 13.34%. Amid cost pressure and shrinking orders, the room for small enterprises to survive further narrowed.
Demand side, the brass bar market in February showed a clear pattern of “pre-holiday stagnation and a slow recovery after the holiday.” On the one hand, affected by the Chinese New Year holiday, most enterprises entered holiday mode in early February, wrapping up production activities ahead of time. On the other hand, after returning from the holiday, downstream production resumptions in traditional sectors such as valves and sanitary hardware were slow. As of month-end February, many small and medium-sized enterprises were still shut down or running at low utilization, resulting in limited new orders for brass bar enterprises, with deliveries mainly focused on outstanding orders accumulated before the holiday.
Cost and stockpiling, pressure on the raw material side remained pronounced. Enterprises showed low acceptance of high-priced raw materials; coupled with uncertainty over future demand, overall willingness to stockpile was weak, with most maintaining just-in-time procurement. Meanwhile, as end-user cargo pick-up was slower than the production pace, finished product inventories at some enterprises saw a slight buildup. On recycled raw materials, imported secondary brass prices remained elevated, further squeezing profit margins for brass bar enterprises. With weak demand, cost pass-through was not smooth, leaving some small and medium-sized enterprises less willing to resume operations and resulting in a slow rebound in operating rates.
Looking ahead to March, as downstream small and medium-sized enterprises fully resume operations after the Lantern Festival, brass billet operating rates are expected to post a restorative increase. SMM expects the operating rate of copper billet producers in March to rise 22.88 percentage points MoM to 45.66%. However, it should be noted that orders in traditional end-use sectors such as sanitary hardware have not shown a clear improvement, so March operating levels may struggle to surpass those of January.
![Downstream Bearish on Copper Prices, Intraday Purchase Willingness Flat [SMM Secondary Copper Daily Review]](https://imgqn.smm.cn/usercenter/KtfdC20251217171713.jpeg)
