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[Cu] SMM Survey - Operating Rates at Copper Tube Producers Remain High in November

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SMM Daily Review (Dec. 1)

SHANGHAI, Dec. 2 (SMM) -- A recent SMM survey of 20 copper tube producers (total capacity: 1.056 million mt/yr; monthly copper consumption: 62.45 kt/month) revealed the following insights:
&nbsp;&nbsp;&nbsp; 1) Operating Rates
&nbsp;&nbsp;&nbsp; According to the SMM survey, monthly copper consumption at the 20 producers was 62.45 kt during November, with average operating rates 71.0%, up 50.4% YoY, but down 3.1% MoM.&nbsp; Production at the copper tube producers has steadily climbed since operating rates plunged at the start of the financial crisis in late 2008.&nbsp; In addition, the 4Q is considered the traditional peak demand period for copper tubing as air-conditioner manufacturers replenish stocks, resulting in higher operating rates during November.
&nbsp;&nbsp;&nbsp; 2) Inventories
&nbsp;&nbsp;&nbsp; The survey also reveals inventories of raw materials held by copper tube producers accounted for 14.6% of monthly copper consumption, up 36.4% MoM compared with October levels of 10.7%, but inventories of raw materials remained low.&nbsp; Rising copper prices are boosting producer outlook, and will create strong incentives to replenish stocks when copper prices fall, but the rising capital pressure, as well as the current high copper prices, is limiting any increase in raw material inventories.
&nbsp;&nbsp;&nbsp; 3) Forecast for December Orders
&nbsp;&nbsp;&nbsp; According to the survey, 40% of producers predict December orders will likely drop for three major reasons. First, export orders will decline sharply as the Christmas holiday period in December approaches.&nbsp; Second, consumers may reduce orders due to capital pressure at the end of the year.&nbsp; Third, although the 4Q is considered the seasonal peak demand period for air-conditioning tubing, orders for freezer tubing and other products used in refrigeration industry will fall, as consumption is expected to be weak during the remainder of 2009.
&nbsp;&nbsp;&nbsp; 30% of producers predict December orders will increase.&nbsp; They say orders in December were always sufficient in past years, and that air conditioner manufacturers will accelerate stock replenishment and production before the Chinese New Year.&nbsp; The remaining 30% of producers predict December orders will be flat at November levels.&nbsp;&nbsp; They say orders in November were relatively high, with orders coming mainly from domestic consumers since the beginning of the financial crisis.&nbsp; In this context, any negative impact from the Christmas holiday will be limited, and operating rates will remain stable.
&nbsp;&nbsp;&nbsp; 4) Forecast for Copper Prices 
&nbsp;&nbsp;&nbsp; According to the survey, 80% of producers believe copper prices will advance further, and the optimistic market sentiment will also help push up copper prices to a range of USD 7,000-7,200/mt. 15% of producers believe copper prices will fall in the near term. They said copper prices lacked solid support and will likely fall to the range of USD 6,500-6,800/mt after set a new high for 2009. The remaining 5% of producers believe copper prices will fluctuate slightly at current levels.
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[cu]-smm-survey---operating-rates-at-copper-tube-producers-remain-high-in-november

[Cu] SMM Survey - Operating Rates at Copper Tube Producers Remain High in November | SMM

[Cu] SMM Survey - Operating Rates at Copper Tube Producers Remain High in November

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