[Cu] CBI Survey - Operating Rates at Copper Rod and Wire Producers

SHANGHAI, June 23 (CBI China) -- A recent CBI survey of 23 major domestic medium-and-large copper rod and wire producers (total capacity: 2.75 million mt/yr) revealed the following insights:

    1) Operating Rates

    According to the CBI survey, the average operating rate at the 23 producers during June was 72.4%, down 2.4% MoM, and down 1.7% YoY. Operating rates at large producers have been climbing steadily, while operating rates at medium producers have experienced significant declines, down 10.3% MoM. Operating rates at select small producers increased slightly to 69.7%, but still remain low.

    2) Inventories

    The survey also revealed raw material inventories at the 23 copper rod producers continued to decrease. Raw material inventories accounted for 9.5% of monthly copper consumption during June, down 1.6% MoM. Finished goods inventories accounted for 9.0%, down 1.6% MoM.  Downstream buying interest plunged after copper prices surged above RMB 40,000/mt, with most producers purchasing raw materials based on normal production plans only, keeping raw material inventories low. As the general economic environment remains sluggish, and sales remain uncertain, more manufacturers are producing based on solid sales forecasting and orders, in an attempt to reduce finished goods inventories and minimize risks.

    3) Scrap Copper

    The ratio between refined and scrap copper at the 23 producers was 37.59 to 1, up 5% MoM. However, the price spread between refined copper and #1 bright copper has narrowed since May, signaling higher scrap prices, which is driving the increase in refined copper consumption. In addition, large volumes of containers used for importing scrap copper are piled up at ports due to stringent customs examinations of imported scrap materials, creating additional difficulties in scrap copper availability and contributing to falling scrap copper consumption. 

    4) Forecast of Copper Prices

    According to the survey, 57% of producers believe copper prices will continue to fluctuate, and they believe copper prices will move around RMB 40,000/mt, with the fluctuation range of RMB 38,000-43,000/mt. 26% of producers predict copper prices will fall, as copper prices have reached a new high after previous round of rise, leaving thin possibility for the price to soar again. Copper prices will fluctuate in the RMB 37,000-38,000/mt range. 13% of producers were uncertain about copper price due to the recovery of macro economic environment and weak domestic consumption. The remaining 4% of producers predict copper prices will soar again to break the previous high level.

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