The operating rate of copper wire and cable companies increased for the fourth consecutive month in September! SMM expects the upward trend to be difficult to sustain in October [SMM Analysis]

According to the SMM survey, the operating rate of SMM wire and cable sample enterprises in September was 80.72% (64 surveyed enterprises, sample capacity of 3.643 million mt), up 4.19 percentage points MoM, achieving four consecutive months of growth. Although it was still 7.33 percentage points lower compared to the same period in previous years, the decline has narrowed; it was 2.97 percentage points higher than the expected operating rate. Among them, the operating rate of large enterprises was 88.10%, medium-sized enterprises 51.64%, and small enterprises 45.45%. Overall, the "September peak season" still showed demand, boosting the operating rate of SMM copper wire and cable companies.

Specifically, the main reason for the increase in the operating rate of SMM copper wire and cable companies in September was the double holiday, with downstream enterprises having pre-holiday stocking demand, especially the National Day holiday having a more pronounced effect on pre-holiday stocking. According to SMM, since mid-September, downstream stocking demand gradually appeared, but as before, order growth was more concentrated in large enterprises, with small and medium-sized enterprises showing relatively weaker demand. Although overall orders in September were relatively sufficient, the impact of copper prices cannot be ignored. By the end of September, copper prices continued to rise, and companies indicated that when copper prices exceeded 78,000 yuan/mt, it significantly suppressed downstream purchasing enthusiasm. By industry, apart from orders from civil real estate construction projects and home decoration wires, many companies reported growth in orders from other industries, with power grid orders still accounting for the main proportion.

In September, the raw material inventory of SMM copper wire and cable sample enterprises recorded 53,490 mt, with a raw material inventory/output ratio of 21.83%, up 4.2 percentage points MoM; finished product inventories recorded 55,780 mt, with a finished product inventory/output ratio of 22.76%, down 0.87 percentage points MoM. Wire and cable companies also stocked up for the National Day holiday in September, resulting in a significant increase in raw material inventory.

SMM expects the operating rate of copper wire and cable companies in October to decrease by 1.29 percentage points MoM to 79.43%, and to be 11.29 percentage points lower compared to the same period last year. Many companies told SMM that there are no significant growth points in market demand for October, and it would be ideal if it could remain the same as September. One company stated that due to reduced demand from real estate and infrastructure projects this year, its home decoration wire orders decreased by about 70% YoY. However, according to SMM, some companies will start promotional activities in October to ensure order volume, sacrificing profit margins to secure orders, which may provide some support for the operating rate of cable companies in October. Additionally, as copper prices continued to rise at the end of September, cable and downstream companies re-entered a cautious purchasing state. If copper prices unexpectedly rise again in October, it will inevitably impact the growth of new orders for wire and cable companies.