February operating rates across Chinese aluminium wire, cable producers plunge on weaker demand and CNY holiday

According to Shanghai Metals Market, producers of aluminium wires and cables in China saw lower operation rates in February due to poor orders and the Chinese New Year holiday.  The average rates across wire and cable plants were at 47.18 per cent in the said month, down 21.67 percentage points from January, but up 7.88 percentage points from the same period last year, showed SMM survey.

During the CNY holidays, most plants did not return to normal operation until February 19, found SMM.

As operations at construction sites slowed down owing to cooler weather, demand for electronic wires and telecommunication cables started shrinking, further resulting in slower operations across wire and cable plants in February. Most buyers required post-holiday delivery for orders for wires and cables.

The SMM survey also showed the industrial concentration across the wire and cable producers after a subway issue in Xi’an in 2017. Large plants in February received more orders in February 2018 that raised production. Orders to small and medium-sized plants remained poor.

Besides, SMM found that the ratio of raw materials inventory to output across wire and cable producers came in at 38.89 per cent in February, up 11.56 percentage points from a month ago. A relatively sharper decline in production, despite lower stocks of raw materials at wire and cable producers, pushed up the ratio.

Operating rates across wire and cables producers are however, expected to rebound by 40.35 percentage points to stand at 87.53 per cent in March, as end-market consumption picks up. Many producers told SMM that received improved orders from the solar, power grid, and offshore wind power sectors. But demand from magnetic wires and telecommunication cables remained low.