Weak Demand Recovery, Operating Rates Continued to Edge Down [SMM Brass Billet Market Weekly Review]

This week (8.21-8.27), the operating rate of SMM brass billet sample enterprises was 48.55%, down 0.19 percentage points MoM and down 0.96 percentage points YoY. Although copper prices pulled back, the recovery in end-use demand remained weak. Combined with the temporary production suspensions at some small plants due to the typhoon, the operating rate continued to decline. On the raw material side, supplies of secondary brass remained tight, and raw material prices stayed high, continuously squeezing processing margins. The days of raw material inventories for sample enterprises were 3.56 days, down 0.05 days MoM, remaining low. On the demand side, downstream restocking willingness was weak, with limited rigid-demand orders, and destocking of finished product inventories was hindered. This week, the days of finished product inventories for sample enterprises were 5.04 days, up 0.08 days MoM, shifting from destocking to a slight build.

       Looking ahead to next week (8.28-9.3), off-season demand is expected to show little improvement, while the pattern of tight raw materials and elevated costs will persist, and post-typhoon production resumptions at small plants will provide limited support. SMM expected the operating rate to edge down to 48.42% next week, down 0.58 percentage points YoY.