Significant Drop in Copper Prices Triggers Strong Wait-and-See Sentiment, Wire and Cable Enterprises' Operating Rate Slightly Increases

Publicado: Nov 15, 2024 19:01

Fonte: SMM

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This week (11.8-11.14), the operating rate of SMM copper wire and cable enterprises was 89.37%, up 2.07 percentage points WoW, and 3.28 percentage points higher than the expected operating rate.

This week (11.8-11.14), the operating rate of SMM copper wire and cable enterprises was 89.37%, up 2.07 percentage points WoW, and 3.28 percentage points higher than the expected operating rate. This week, copper prices fell sharply, but the boost to the operating rate of wire and cable enterprises was limited. The main reason is that most downstream customers remain bearish on the market outlook and prefer to wait amid the continuous decline in copper prices. Therefore, although copper prices fell continuously this week, the increase in new orders for most wire and cable enterprises was not significant. By industry, power grid orders were relatively strong, and there was growth in photovoltaic and wind power projects, but orders for construction and real estate projects and machinery equipment were not significantly increased. Additionally, during the copper price decline this week, the raw material inventory of wire and cable sample enterprises increased significantly, with many enterprises procuring raw materials based on their own situations, and finished product inventory slightly increased, indicating that the speed of customer delivery has not accelerated after the copper price drop. Currently, customers are sensitive to copper prices, and since most customers expect copper prices to remain low next week, the operating rate of copper wire and cable enterprises is expected to increase by 1.95 percentage points to 91.31% next week.

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Declaração sobre a Fonte de Dados: Com exceção das informações publicamente disponíveis, todos os demais dados são processados pela SMM com base em informações publicamente disponíveis, comunicação de mercado e com base no modelo de base de dados interna da SMM. São apenas para referência e não constituem recomendações para a tomada de decisão.

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[SMM SHFE Copper Spot] Looking ahead to tomorrow, SMM recorded social inventory in Shanghai at 55,500 mt, down 11,000 mt WoW from Monday this week; social inventory in Jiangsu stood at 23,200 mt, up 3,200 mt WoW, with inventory trends in the two east China regions clearly diverging. The rapid destocking in Shanghai was driven on one hand by the pullback in copper prices and spot premiums in the previous trading session, which released some dip-buying from downstream buyers and led to solid spot warehouse withdrawals; on the other hand, arrivals remained relatively limited recently, further pushing Shanghai inventory lower. Jiangsu, by contrast, saw inventory buildup due to concentrated arrivals from some smelters. On the demand side, buying picked up after yesterday's copper price pullback, but intraday consumption enthusiasm has already cooled, with downstream buyers returning to just-in-time procurement and remaining limited in their acceptance of current premiums. Meanwhile, the backwardation spread between the front and next month contracts remains at a relatively high level, and suppliers' rollover and shipment pace will remain a key variable affecting spot premiums. Overall, low inventory and limited arrivals in Shanghai provide some support to spot prices, but insufficient demand sustainability still caps premium upside. Spot prices against the SHFE copper 2609 contract are expected to remain rangebound tomorrow, with the center possibly edging slightly lower, though room for a further sharp decline is relatively limited. Going forward, the key focus will be on changes in the backwardation structure between the front and next month contracts.

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