Rainy Season Arrives, Galvanizing Demand Weakens [SMM Galvanizing Weekly Review]

SMM, July 10: The operating rate of the galvanising sector was 53.51% this week, down 1.05 percentage points WoW. Raw material side, zinc prices consolidated with an uptrend this week, downstream purchasing enthusiasm weakened somewhat, and a strong wait-and-see sentiment prevailed, leading to the consumption of raw material inventories as the main activity. As a result, zinc ingot inventories at galvanising enterprises declined. The operating rate decline was mainly dragged down by the demand side. Both north and south regions gradually entered the rainy season, coupled with extreme weather such as typhoons, which slowed down end-user construction progress. Overall market demand was weak, domestic trade orders for galvanising enterprises pulled back notably, and export orders did not see significant improvement. Meanwhile, ferrous metals prices continued to weaken, market purchasing sentiment turned cautious, finished product inventories accumulated modestly, and enterprise production schedules contracted compared to earlier periods. In addition, some northern areas were affected by environmental protection vehicle restriction policies, which limited product shipments and disrupted normal production schedules to some extent. Next week, as some enterprises resume their production schedules, the industry’s operating rate is expected to edge up to 53.68%.