SMM

       This week (July 11-17), the operating rate of SMM copper wire and cable enterprises stood at 72.90%, up 1.38 percentage points MoM and down 11.24 percentage points YoY, exceeding expectations by 2.33 percentage points. According to SMM, copper prices gradually stabilized this week after experiencing a prior correction. The main factors contributing to the rebound in operating rates were two-fold: first, the concentrated release of orders accumulated during the downward phase of copper prices last week, and second, the growth in orders from the State Grid Corporation of China, which provided additional support to the industry. From the inventory perspective, despite being in the traditional consumption off-season and enterprises generally holding bearish expectations for copper prices, maintaining a cautious procurement attitude, some enterprises, which had previously purchased a certain amount of copper rods due to concerns about the continuous rise in copper prices, concentrated on picking up goods this week, driving a 3.36% MoM increase in raw material inventories of the sampled enterprises, reaching 15,990 mt. In terms of finished product inventories, although there was still pressure on terminal capital turnover, some enterprises effectively stimulated cargo pick-up demand by adopting a strategy of enjoying discounts through prepayment for cargo pick-up, leading to a slight decrease in finished product inventories, down 0.25% MoM, reaching 20,010 mt. From an industry perspective, currently, most end-use industries are dominated by bearish expectations for copper prices, with order releases continuing to be cautious and in a wait-and-see attitude. Only the growth in orders from the State Grid Corporation of China provides effective support to industry operating rates. The new orders on hand generated by the prior correction in copper prices still support the current operating rates. However, as the traditional off-season effect continues to intensify, coupled with strong wait-and-see sentiment among terminal users regarding copper prices, industry operating rates may gradually weaken. Therefore, SMM expects that next week (July 18-24), the operating rate of copper wire and cable enterprises will decline by 0.93 percentage points MoM to 71.97%, with the YoY decline further widening to 15.54 percentage points.