End-use Demand Recovery Remains Weak, Brass Billet Operating Rates Continue to Pull Back [SMM Analysis] [SMM Analysis]

        Currently, the brass billet industry is still in the traditional consumption off-season; end-use recovery remains insufficient, and coupled with weather disruptions, industry production is under further pressure. According to the latest SMM data, last week (Aug 21-27), China’s brass billet industry operating rate came in at 48.55%, down 0.19 percentage points MoM and down 0.96 percentage points YoY.

        On the raw material side, secondary brass supply remained persistently tight, with limited incremental supply from domestic scrap brass circulation and imports. Raw material prices remained high, continuing to squeeze processing margins at brass billet enterprises. Even with periodic pullbacks in copper prices, enterprises’ restocking willingness remained weak, with most maintaining a purchase-as-needed approach. Last week, sample enterprises’ days of raw material inventories were 3.56 days, down 0.05 days MoM; raw material inventories remained at low levels, and raw material shortages continued to constrain capacity release at some small and mid-sized plants.

        On the demand side, the off-season effect continued, with downstream home appliances, sanitary ware, hardware and other end-use industries showing limited restocking willingness. The market was dominated by rigid-demand orders, and new orders were limited overall. Although periodic pullbacks in copper prices created some trading opportunities, they did not drive large-scale downstream purchases; enterprise shipment pace was slow, and finished product inventory destocking was hampered. This week, sample enterprises’ days of finished product inventories were 5.04 days, up 0.08 days MoM; inventories shifted from previous destocking to slight accumulation, and enterprises still faced capital tie-up pressure. In addition, last week some small producers suspended production temporarily due to typhoon weather, further dragging down the industry’s overall operating level.

        Looking ahead to this week (Aug 28-Sep 3), the industry’s off-season pattern has not yet reversed; end-use demand is unlikely to improve significantly, and downstream users will remain cautious and wait-and-see amid consolidating copper prices. The tightness in recycled brass raw materials and high costs is likely to persist in the near term; the capacity boost from small plants resuming production after the typhoon will be limited. SMM expects this week’s brass billet operating rate to edge down to 48.42%, down 0.58 percentage points YoY, with overall industry production schedules remaining low and enterprise operating pressure unlikely to ease significantly in the near term.