Poor demand, earlier CNY breaks lower Jan operating rates across wire, cable plants

SHANGHAI, Feb 13 (SMM) – Continued slack downstream demand and earlier CNY breaks extended the decline in the operating rates across Chinese manufacturers of wire and cable in January. 

Rate averaged 68.85% in January, compared with 83.01% in December and 73.22% in January 2018. Surveyed mills, the same ones from a year ago, included capacity of 1.55 million mt in January. Expansions at a large mill grew capacity from the 1.51 million mt in January 2018.

In January, downstream sector such as infrastructure and real estate continued to experience a seasonal lull. This drove wire and cable producers to close for CNY breaks or maintenance earlier than previous years. SMM learned that most plants had closed for holiday by January 31, and mostly resumed on February 11.  

SMM research also showed that the raw material inventory to output ratio across wire and cable producers came in at 27.33% in January, up 6.17 percentage points from December. Plants restocked raw materials to ensure production after holiday, in anticipation of on-demand purchases from downstream buyers. Those plants of wire, cable are likely to further stockpile copper rod after CNY. 

For February, CNY closures are likely to lower the average operating rate by 20.34 percentage points month on month to 48.51%. The rate stood 9.2 percentage points higher than February 2018. A full resumption across wire and cable producers is expected next month.  

Data from the China Electricity Council showed that investment in power grid projects in 2018 grew 0.6% compared to a year earlier, to 537.3 billion yuan. China's electricity consumption increased by 1.9 percentage points from 2017. 

Orders for enamelled wire due for delivery after CNY picked up, after power grid firms launched tenders at the end of January, SMM learned.