The Operating Rate of Copper Pipe Enterprises Declined in August, No Improvement Expected in September [SMM Analysis]

August operating rate of copper pipe enterprises was 65.43%

According to the SMM survey, the operating rate of copper pipe enterprises in August was 65.43%, down 7.23 percentage points MoM and down 3.92 percentage points YoY (Survey sample: 23 companies, sample capacity: 2.51 million mt). The copper pipe industry was in the off-season in August, and domestic sales of air conditioners recorded a YoY decline starting in June due to high inventory, while export growth also slowed MoM. Large copper pipe factories reported that overall air conditioner pipe orders dropped by 10-15% MoM in August, medium-sized factories saw a drop of around 5%, and smaller factories had minimal orders, resulting in a 3% overall decline MoM. By industry, as the number of air conditioner production schedules decreased MoM and September had yet to enter the H2 production peak, actual production of air conditioner pipes significantly dropped in August, with the operating rate falling noticeably. In July, there was still demand for air conditioner maintenance and installation pipes due to the hot weather, but this demand gradually decreased in late August. The alloy pipe market was more varied; brass alloy pipes saw no growth due to the sluggish real estate market affecting overall bathroom pipe demand, while nickel-copper pipes saw a slight increase in August, driven by rising demand for marine engineering pipes recently.

In August, the raw material inventory/output ratio of copper pipe enterprises was 3.88%

The raw material inventory/output ratio of copper pipe enterprises in August was 3.88%, up 0.15 percentage points MoM. Copper prices fluctuated within a narrow range, and although the raw material inventory of copper pipe enterprises decreased under limited orders, the decrease rate was lower than the production decline, leading to an increase in the raw material inventory/output ratio.

September operating rate of copper pipe enterprises is expected to be 65.42%

According to SMM, the operating rate of copper pipe enterprises is expected to be 65.42% in September 2024, down 0.01 percentage points MoM and down 1.08 percentage points YoY. According to ChinaIOL September production schedule data, air conditioner production for domestic sales is expected to decline by 14.4% YoY, while production for exports is expected to grow by 31.8% YoY. Although the total air conditioner production still has an 8.8% YoY increase, it is lower than the previously anticipated 12.9%. Copper pipe enterprises indicated that the Mid-Autumn Festival holiday would have limited impact on production, and overall operating rates are expected to remain the same as in August.