Operating rates at copper processors to extend decline in Oct

SHANGHAI, Nov 12 (SMM) – Operating rates across Chinese manufacturers of copper rod, sheet/plate/strip/foil and tube/pipe are expected to dip 1.09 percentage point from a month ago to 77.29% in October, SMM research found.

The rates stood at 78.38% in September, down 1.9 percentage points month on month amid a steep decline in the tube/pipe sector.

Despite fiscal stimulus including tax cuts and infrastructure push, the operating rates across Chinese copper processors began a downtrend from July with downbeat figures for the automobile and home appliances sectors. Export orders weakened in the third quarter of the year amid the ongoing US-China trade tensions while tightened liquidity, on the backdrop of economic deleverage, added fuel to the reshuffle of China’s copper processing industry which have been vexed by overcapacity.

Soil in the north gets frozen in colder weather after the Start of Winter on November 7, a solar term of the Chinese calendar, and this further clouded market prospects for future consumption.

Chinese cable and wire producers operated at 86.21% in October, down 2.64 percentage points from September, and the rates are expected to edge up 0.82 percentage point to 87.03% in November. Producers’ bearish outlooks on consumption and barely changed orders capped the gains in operating rates. Consumption across infrastructure and real estate sectors appeared yet to substantially pick up, and increasingly adverse weather slowed operation across northern areas.

Operating rates at plants that produce rod with copper cathode as feedstock came in at 76.42% in October, down 3.71 percentage points month on month. The average rate is expected to extend its decline to 76.15% in November amid wide price spreads between copper cathode and copper scrap. The spread exceeded 1,000 yuan/mt after mid-September and this drove consumers to buy scrap-made copper rod. Poor consumption also frustrated copper rod producers with copper cathode as feedstock.