Off-Season Demand Combined with High Copper Prices Puts July Wire and Cable Production Under Pressure [SMM Analysis]

  In July, the operating rate of the copper wire and cable industry recorded 69.82%, down 2.4 percentage points MoM and down 1.79 percentage points YoY. Among them, the operating rate of large enterprises was 75.13%, that of medium-sized enterprises was 47.75%, and that of small-sized enterprises was 46.93%.

  During the month, copper prices showed wild swings, and the production and operation of wire and cable enterprises were significantly disrupted by price fluctuations. At the beginning of the month, copper prices corrected in stages, stimulating the downstream to release some restocking orders; however, prices then shot up again to high levels, continuously suppressing the enthusiasm of downstream enterprises for procurement and order signing. By end-use demand, orders across application fields had a mediocre performance overall. The power grid mainly placed orders in small batches, forming limited support for the industry's operating rate bottom; among them, medium- and low-voltage cable orders were relatively moderate, but the profit margin of this product category was quite limited.

  In July, the raw material inventory ratio of the copper wire and cable industry dropped 0.45 percentage points MoM to 22.54%, while the finished product inventory/output ratio increased 1.23 percentage points MoM to 18.98%. During the month, copper prices stayed high. Combined with factors like the futures price spread structure and elevated spot premiums, raw material procurement by wire and cable enterprises became more cautious, and the production end prioritized consuming existing raw material stockpiles. Meanwhile, downstream enterprises were constrained by financial pressure from high copper prices, causing the pace of cargo pick-up to slow and purchases to be mostly limited to essential needs. This impeded warehouse withdrawals of finished products, leading to an inventory buildup at the finished product end.

  The operating rate in August is expected to decline 1.17 percentage points MoM to 68.64% and drop 3.78 percentage points YoY. At this stage, overall industry orders remain weak. Only orders related to the State Grid and communication sector maintain relative resilience, while demand in other downstream fields has not shown significant improvement. Due to the off-season, the operating rate shows a tendency to drop easily but rarely rise.