Operating rates in enamelled wire industry exceeded expectations in November

SHANGHAI, Dec 14 (SMM)—Operating rates at enamelled wire producers in November stood at 79.05%, up 1.1 percentage points month-on-month and 0.51 percentage point higher than the expected 78.54%, according to the latest SMM survey of 34 producers with total capacity of 1.08 million mt/year. Operating rates stood at 78.67% across big plants; operating rates rose 3.02 percentage points to 80.97% across medium-sized producers, and at 60.52% across small plants, 1.03 percentage points lower on the month.

Export orders accounted for higher-than-expected operating rates in November. Most of the enamelled wire companies have seen brisk export orders at their downstream industries (for instance air conditioners, refrigerators and power tool companies). Orders at some companies have been scheduled to after Chinese New Year holiday. Export data of air-conditioners in November topped expectations. Export volume of air-conditioners in November stood at 4.18 million units, a 32.7% increase on the month and an increase of 15% year-on-year. Orders from the automotive industry like micro-motors and automotive wiring harnesses have also increased steadily. Vehicle production in November stood at 2.85 million, an increase of 9.6% year-on-year and a rise of 11.5% month-on-month, according to data from the China Association of Automobile Manufacturers (CAAM). On the other hand, orders from the electric bicycle industry appeared to have declined; automobile production will be affected by tight supply of chips in December. Despite brisk export orders, tight container capacity forced some of the companies to defer shipments for some orders to after CNY. Some of the enamelled wire enterprises in Henan have been affected by the impact of environmental protection in November, which will continue in December.

Inventory of finished products at enamelled wire producers has dropped significantly against continued gains in copper prices. The ratio of raw material inventory to total production in November stood at 10.67%, down from 11.65% in October.

Source: SMM

Operating rates in the enamelled wire industry in December is expected to stand at 77.32%, a decrease of 1.7 percentage points from November. Output at most enamelled wire companies in December has remained flat from November. However, many companies in Henan have stopped production for nearly half a month due to environmental protection issues. Production is likely to recover to 70% of normal levels after resumption.

For more information on the Chinese domestic copper markets, please subscribe to China Copper Weekly.