Mar operating rates at galvanising plants exceed expectations

SHANGHAI, Apr 12 (SMM) – The average operating rate across Chinese galvanising plants increased by 43.08 percentage points on the month and by 23.21 percentage points on the year, to stand at 91.05% in March, SMM data showed on Thursday April 11. 

Higher prices of steel products improved profits at galvanising plants. This, coupled with stepped-up purchases from downstream buyers ahead of VAT cuts in April, bolstered output at large producers by over 20% and pulled the average operating rate higher than expected. Production cuts during the political sessions minimally affected the rate in March. 

The rate is expected to fall 1.45 percentage points month on month to stand at 89.61% in April, up 3.48 percentage points from April 2018, showed an SMM survey.

Large pipe producers moderated their output in April after the VAT cuts, but they will continue to contribute most of the downstream consumption this month. 

In the latter half of April, higher demand for galvanised structural parts from the infrastructure sector will offset the consumption decline from lower output of galvanised pipe. This will keep operating rates across galvanising plants at highs in April.