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Analysis of Basic Operation of China’s Copper Rod Industry in First Quarter of 2017

1. Basic Situation of Copper Rod Production in the First Quarter of 2017

In the first quarter of 2017, Antaike researched on 18 domestic copper rod companies and 24 production lines involving a total capacity of 5.235 million tons, accounting for around half of national total in-production capacity and over 60% of national total capacity of imported lines. There are nine production lines of German CONTIROD totaling 2.015-million-ton capacity, 15 lines of American Southwire totaling 3.22-million-ton capacity. The survey was mainly conducted in East, South and North China.

In the first quarter of 2017, integrated capacity utilization is 67.4% and cumulative production 882,000 tons, a year-on-year decrease of 3%. After the relatively steady period of downstream ordering and copper rod production in the last quarter of 2016, processing fee was under great pressure of competition especially in South China and most enterprises lacked confidence in later downstream consumption, with no highlight in overall consumption in the first three months of 2017.

Influenced by factors like the Spring Festival holiday and companies’ annual plans, stock rose slightly in January; February witnessed stock consumption and capital return. After the holiday, orders began to restore but showed no upbeat note. In March, the number of orders climbed and capacity recovered markedly with a national integrated capacity utilization of 83.3%, up 20% and 30% compared with those in the first and second month respectively. The quick shift of market was mainly attributable to stricter check of low-quality rods. Lower price of copper led to higher purchase demand from downstream companies and thus more orders. In the time leading to April, consumption was turning stronger. As a result of the exposure of Shaanxi Aokai incident, low-quality rods were inspected across the country and wire and cable companies attached great importance to product quality, which controlled wire and cable market with low-quality rods as raw materials to some extent and released some room for electronic copper rod market. It is expected that consumption will grow with power grid investment in the second quarter.

In 2017, State Grid plans to invest 465.7 billion yuan in power grid, 6.1% more than that of last year. It completed investment of 542.6 billion yuan in 2016, exceeding the planned amount by 23.6%. The actual investment this year is expected to keep increasing. Strong development of transmission and distribution projects, transformation of rural grid and key project of “coal to electricity” in Beijing-Tianjin-Hebei will significantly drive wire and cable consumption.

2. Basic Situation of Relevant Consumption Fields in First Quarter of 2017

(1) Investment in power grid projects and new power generation capacity of national infrastructure

In the first quarter of 2017, 85.5 billion yuan power grid investment was completed, 2.2% more than that of the same period of last year. National infrastructure added 21.87 million kilowatt power generation capacity, down 6.28 million year on year, among which hydropower accounted for 1.93 million kilowatt, fossil fuel power 11.39 million, nuclear power 1.09 million and wind power 3.52 million. Hydropower and wind power put into production rose 340 thousand and 1.01 million kilowatt respectively compared with the same period last year while fossil fuel power and nuclear power was reduced by 6.07 and 1.09 million kilowatt respectively.

(2) Production of auto industry

The month-on-month increase of auto production and sales in March 2017 was relatively fast while year-on-year increase was slightly lower. In the first three months, automobile production and sales grew steadily: 7,133,100 cars were produced and 7,002,000 sold, posing year-on-year increases of 7.99% and 7.02% respectively.

(3) Real estate industry

In the first quarter of 2017, the investment in real estate development all over the country was 1929.2 billion yuan, a nominal increase of 9.1% year on year. The growth rate rose by 0.2 percentage point from January and February. The area of commercial house sold in the first quarter was 290.35 million square meters, 19.5% more than the same period of last year while the growth rate dropped by 5.6 percentage points from January and February.

Against the background of actively deepening real estate policy regulation by governments at different levels, growth rates of new real estate development, construction completion and sales area all begin to fall. It is predicted that a steady return to a rational market is likely, especially because of the influence of recent introduction of many policies on the real estate market.