End-use demand performance is weak, zinc oxide demand is mediocre [SMM Zinc Oxide Weekly Review]

The operating rate of zinc oxide enterprises recorded 55.55% this week, down 0.16 percentage points WoW. Inventory side, raw material prices stayed high, enterprises’ procurement costs were under pressure, and they mostly made just-in-time procurement as needed, with raw material inventories basically flat WoW. Downstream end-users showed some stockpiling before the holiday, and finished product inventories saw a slight destocking this week accordingly. The market was in the traditional consumption off-season. Demand in downstream sectors such as rubber, feed, and chemicals showed no significant improvement, and terminal order growth remained limited, dampening the production willingness of zinc oxide enterprises and causing the operating rate to weaken continuously. At the current stage, raw material prices stayed high, and the industry generally faced pressure from rising raw material costs. However, weak downstream demand combined with overcapacity meant that selling price increases lacked support, continuously squeezing corporate profit margins. Looking ahead to next week, the off-season pattern in end-user markets is unlikely to improve, and enterprise production enthusiasm will be difficult to boost. The industry operating rate is expected to remain weak, moving sideways around 55.4%.