January Operating Rate of Enamelled Wire Industry—Expected to Drop Significantly, but Exceeded Expectations? [SMM Analysis]

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      According to SMM, the comprehensive operating rate of the enamelled wire industry in January was 61.47%, down 6.23 percentage points YoY and 10.99 percentage points MoM. Among them, the operating rate of large enterprises was 64.19%, medium-sized enterprises 56.15%, and small enterprises 60.06%.

       Since this year's Chinese New Year holiday fell at the end of January, the significant decline in the operating rate of the enamelled wire industry in January was mainly due to enterprises taking early holidays at year-end and weakened downstream demand, which was in line with market expectations. However, based on survey results, the January industry operating rate still exceeded the forecast (SMM's early January prediction for the enamelled wire industry operating rate was 58.51%), primarily driven by better-than-expected downstream demand. According to SMM, terminal demand related to home appliances and NEVs continued to grow in January, boosting orders for enamelled wire beyond expectations. Some enterprises delayed holidays or even worked overtime during the Chinese New Year to meet production needs, resulting in an operating rate that outperformed expectations.

      In December, the raw material inventory/output ratio of enamelled wire enterprises was 13.89%, up 1.8 percentage points MoM, while the finished product inventory/output ratio was 44.87%, up 14.05 percentage points MoM. Enamelled wire enterprises stocked up on inventory before the Chinese New Year to ensure normal deliveries, while slower downstream production resumption and cargo pick-up after the holiday led to a significant increase in finished product inventories.

Data Source: Compiled by SMM        

       The operating rate of the enamelled wire industry in February is expected to be 58.76%, down 2.71 percentage points MoM but up 13.65 percentage points YoY.

       Due to the impact of the Chinese New Year holiday, most enamelled wire enterprises had fewer than 20 actual production days in February. Additionally, factors such as rising copper prices after the holiday, incomplete downstream resumption, mediocre performance of new orders, and high finished product inventories contributed to the low operating rate in February. However, demand for enamelled wire from downstream sectors such as home appliances, NEVs, and power transformers continued to grow. Some enterprises expressed optimism about subsequent orders, expecting a good performance in orders after mid-February.