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

SHANGHAI, June 9 (CBI China) -- A recent CBI survey of 25 major domestic copper cable producers (annual copper consumption: 889 kt) revealed the following insights:

    1) Operating Rates

    According to the survey, the average operating rate at the 25 producers was 71.1% in June, up 2% from April levels. Operating rates at large producers were up 7.4%, while operating rates at medium producers were down 4.6%. Projects and orders received by all producers varied, an indication that copper cable demand has not yet fully recovered.  Current operating rates at copper cable producers remain stable.

    2) Inventories of Raw Materials

    The survey indicated raw material inventories as a proportion of monthly copper consumption during April was 22.3%, flat at April levels. Inventories at large producers were down 5.4%, while inventories at medium producers were up 7%. Copper prices have risen above previous high levels, but market players were concerned about continuous increases in copper prices in view of the approaching traditional off-peak season for copper. Keeping this in mind, producers kept raw material inventories low.

    3) Forecast of Copper Prices 

    According to the survey, 48% of producers predict copper prices will climb. As the recovery of macro economy boosts the confidence of investors, so various capitals flowed into the capital market, and copper will be the main investment target due to its strongest financial attribute in all the base metals. The inflation which caused copper price to rise will outperform the weakened actual demand and becomes the major factor to guide the copper price in the short term. Hence, copper price will remain strong. The producers believe LME copper price will rise to USD 5,200/mt.

    40% of producers predict copper prices will fall. They believe the current fundamental was not strong enough to support copper price to rise, but they still believe the downward room for copper price will be limited in the short term. They predict copper price will fall back to pre-holiday levels.

    8% of producers were uncertain about copper prices. They had to purchase based on orders.

    The remaining 4% of producers predict copper prices will continue to fluctuate. 

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