SMM March 14 News: This week, the operating rates of galvanising producers recorded 59.21%, down 0.34 percentage points WoW. In terms of raw material inventory, zinc prices rose steadily this week, with restocking for rigid demand and inventory consumption being the main activities. Large producers primarily relied on long-term contracts, leading to a slight decline in zinc ingot inventories. The main reasons for the decline in operating rates this week were environmental protection-driven production restrictions in Tianjin, Hebei, Henan, and Shandong. In Tianjin and Hebei, Class A enterprises were unaffected, Class B enterprises operated at half capacity, and Class C enterprises were completely shut down. Additionally, vehicle transportation was restricted in various regions, impacting enterprise operations. For galvanised pipes, large producers were mainly affected by transportation issues, resulting in reduced shipments and an increase in finished product inventories. Since last year, most enterprises have adopted a low-inventory turnover model, avoiding excessive inventory buildup of finished products. When finished product inventories accumulate significantly, production cuts are implemented accordingly. For galvanised structural components, northern enterprises, mostly small and medium-sized, were significantly impacted by environmental protection-driven production restrictions. Furthermore, due to intense market competition, processing fees not only failed to rise but even declined, prompting some enterprises to cut production to manage costs. In south China, however, orders for steel towers, guardrails, and profiles remained robust, and overall operating rates were better than in the north. Currently, there are no environmental restrictions in the north, and operating rates are expected to rebound slightly next week, reaching approximately 59.48%.
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