[Cu] CBI Survey - Operating Rates at Copper Tube Producers

SHANGHAI, May 19 (CBI China) -- A recent CBI survey of 21 copper tube producers (total capacity: 908kt/yr; monthly copper consumption: 59.45kt/month) revealed the following insights:

    1. Operating Rates

    According to the CBI survey, monthly copper consumption at the 21 producers was 59.45 kt during May, with average operating rates 78.6%, down 3% MoM. Operating rates experienced declines after increasing rapidly during March and April. Operating rates at medium producers fell by 5.8% MoM, while operating rates at small producers were down 13.6% MoM. Producers said consumption weakened as copper tube production entered a seasonal low demand period.

    2. Raw Material Inventories

    The survey also revealed inventories of raw materials held by copper tube producers accounted for 13.9% of monthly copper consumption, up 1.5% MoM. A portion of producers who use large volumes of imported copper as raw materials say the recent SHFE/LME copper price ratio was favorable for copper imports, so recent increases in inventories were attributed to the arrival of previously purchased copper, which was not yet consumed.  Copper prices fluctuated in a high range, generating pessimism at downstream copper processing producers, so inventories may fall as copper tube producers reduce raw material purchases due to weaker demand.

    3) Forecast of Copper Prices

    According to the survey, 66% of producers believe copper prices will fall further. They said the current weak consumption will weigh on copper price, so LME copper price is expected to fall to around USD 4,000/mt, while SHFE copper price will fall to RMB 35,000/mt. 24% of producers said copper prices will continue to fluctuate around RMB 40,000/mt. 5% of producers predict copper price will climb. They said although copper tube consumption was weak, copper prices were near to the bottom line, so the upward room for copper price will be large. The remaining 5% of producers were uncertain about copper prices.

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