[Cu] CBI Survey - Operating Rates at Copper Plate and Sheet Smelters

SHANGHAI, July 7 (CBI China) -- A recent CBI survey of 22 copper plate, sheet, and foil smelters (total capacity: 928.1 kt/yr; monthly raw material consumption: 77.3 kt) revealed the following insights:

    1) Operating Rates

    The average operating rate at the 22 copper plate, sheet, and foil smelters was 63.4% during July, down 3.8% MoM, and down 8.8% YoY. Smelters said orders received by domestic copper and sheet smelters have been falling since May, and predict operating rates will remain low given the seasonal low demand period for copper plate and sheet, as well as current high copper prices.

    2) Consumption of Raw Materials

    Monthly copper consumption at the 22 smelters was 49.05kt, with consumption of refined and scrap copper 44.45 kt and 4.6 kt, respectively, a ratio at 9.66:1. 

    3) Inventories of Raw Materials

    According to the CBI survey, raw material inventories held by the 22 smelters accounted for 15.4% of monthly copper consumption, flat at May levels. Copper prices have continued to fluctuate around USD 5,000/mt since early June. However, downstream consumers believe the sustainability of high copper prices will diminish in the current low demand period, forcing smelters to keep raw material inventories low to minimize market risks.

    4) Scrap Copper Consumption Unchanged

    According to the survey, the consumption ratio between refined and scrap copper was 9.66:1 during June, up significantly compared to April’s 3.25:1 ratio.  Meanwhile, the price spread between refined copper and #1 bright scrap copper has grown to RMB 1,463/mt. Cargo-holders kept price offers firm, given current shortages of imported scrap copper. In this context, scrap copper’s price advantage is eroding, dampening consumer purchasing interest and generating more interest in refined copper.

    5) Forecast of July Orders

    According to the survey, 64% of smelters believe orders will decline in July. They said orders in June have decreased slightly compared to May, but orders may report significant declines during the seasonal low demand period from July to August. 36% of smelters predict July orders will be flat at June levels, but orders will likely drop slightly in July YoY. Smelters also said they could maintain operations, but will obtain less profit due to frequent fluctuations in copper price and unstable price spread between raw materials and finished products.

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