The average operating rate at enamelled wire producers stood at 75.02% in April, up 7.44 percentage points year on year but down 2.94 percentage points month on month, SMM survey showed. The average operating rates of large, medium-sized and small enterprises stood at 77.58%, 74.82%, and 58.12% respectively.
The lower operating rates in April is due mainly to weak demand. According to SMM survey, orders fell across all downstream industries. The changes in the orders of the automobile industry were the most significant. According to the China Passenger Car Association (CPCA), the domestic output of passenger vehicles in the narrow sense was 1.759 million in April, a decrease of 15.7% from the previous month. The output of new energy passenger vehicles was 603,000 units, a month-on-month decrease of 4%. In addition, although the output of household air conditioners in April was still increasing according to ChinaIOL data, the actual downstream sales underperformed expectations. The high production schedules are likely to have been driven by the nearing peak season. On the whole, the orders from home appliances sector were not robust. SMM understood that, at present, only orders related to the transformer and the power industry can achieve steady growth. There has also been no pick-up in export orders.
In April, the ratio of raw material inventory to total production at enamelled wire enterprises returned to the normal level, rising 0.94 percentage points from the previous month to 10.56%. Without continued growth in demand, orders declined. This raised the ratio of finished product inventory to total production by 1.68 percentage points from the previous month to 34.09%.
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