SHANGHAI, Feb 15 (SMM) - The average operating rate of copper cathode rod producers stood at 36.39% in January, a drop of 25.23 percentage points on the month and 19.86 percentage points on the year, according to SMM survey. The average operating rates of large, medium-sized and small enterprises stood at 37.55%, 32.81%, and 46.07% respectively. (Notes: SMM surveyed 52 producers with a total production capacity of 12.84 million mt).
The month-on-month decline far exceeded expectations and was attributable to the following three factors. 1. A large number of employees were infected after China lifted its Covid restrictions in December 2022. 2. January is the traditional off-season for downstream copper wire and cable sector, while orders from the enamelled wire industry fell sharply on a year-on-year basis. 3. Downstream producers were closed early for the CNY holidays, leading to inventory backlogs of rod makers and forcing them to reduce or halt their production.
The average operating rate of copper cathode rod producers is estimated to rebound 25.49 percentage points MoM to 61.88% in February. More than two months have gone by since China lifted its Covid restrictions. The vast majority of rod makers are optimistic about their production and sales in February. However, the actual downstream orders fell short of expectations as of mid-February, hence the operating rates may not recover as significantly as expected as this month.
