Wire and Cable Enterprises' Weekly Operating Rate Drops More Than Expected: No Chance Left for the Chinese New Year? [SMM Analysis]

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       This week (1.3-1.9), the operating rate of SMM copper wire and cable enterprises was 69.31%, down 8.59 percentage points MoM, 9.1 percentage points lower YoY (24.1.5-24.1.11), and 9.24 percentage points below the expected operating rate. According to SMM, the market demand backlog caused by payment terms and other issues before New Year's Day has not been released after entering 2025. End-user purchasing sentiment was not active, and most downstream enterprises were unwilling to invest significant funds in cable procurement before the Chinese New Year. As a result, the increase in new orders for wire and cable enterprises is gradually decreasing, showing a seasonal weakening trend overall. Some enterprises told SMM that due to the earlier timing of the Chinese New Year this year, market orders weakened significantly after New Year's Day, and the holiday period for enterprises this year may be 1-2 days longer than in previous years.

Data Source: SMM

      This week, the raw material inventory of sampled copper wire and cable enterprises increased 0.62% MoM to 21,000 mt, while finished product inventories rose 0.12% MoM to 16,650 mt. This week, a few copper wire and cable enterprises increased production to replenish finished product inventories, while most enterprises chose not to make significant adjustments to their finished product and raw material inventories.

      SMM expects the operating rate of copper wire and cable enterprises to decline by 6 percentage points next week (1.10-1.16) to 63.31%, which will be 8.67 percentage points lower than the same period in previous years. As the Chinese New Year approaches, workers will gradually go on holiday, and logistics will also be affected, leading to a gradual decline in the operating rate of copper wire and cable enterprises. SMM has only learned of a few power generation-related orders recently placed by central state-owned enterprises, while new orders in other sectors such as real estate, infrastructure projects, and even power grid projects are weakening. Many copper wire and cable enterprises reported that although they have a considerable number of contracts in hand, downstream customers are not in a hurry to pick up goods, and most demand will only materialize after the Chinese New Year.