According to the new SMM survey sample with a total capacity of 39.02 million mt/year, the average operating rate at galvanising plants stood at 55.47% in March, up 30.8 percentage points from the previous month and down 8.05 percentage points from the same period last year. Output was 1.80 million mt.
According to the old sample, the average operating rate was 55.03% in March, up 30.52 percentage points month on month but down 19.3 percentage points year on year (involving a capacity of 10.81 million mt and the output was 495,900 mt).
In February most companies stopped production for the Chinese New Year holiday. In addition, traders and some companies replenished their inventories after the holiday. Therefore, operating rates increased significantly. Orders in March were lower than expected. Most galvanising enterprises purchased on demand, and the inventory of zinc ingots decreased. Most galvanising enterprises resumed normal production in early March, but orders were weak due to the impact of the Two Sessions and environmentally-driven production restrictions as well as the weakening of ferrous metals prices. As such, the average operating rate decreased year-on-year.
The average operating rate of large producers with an annual capacity above 500,000 mt jumped 34.34 percentage points month-on-month to 59.73%. According to SMM survey, companies basically resumed work in March, and the number of working days increased. Most of the large galvanising factories are galvanised pipe factories. Although they were affected by the Two Sessions and environmental protection control, the impact was insignificant. Most companies were producing normally, but the prices of ferrous metals were weak in March and orders were lower than expected, resulting in a large inventory of finished products at large galvanised pipe factories. The production of large galvanised structural parts factories gradually got back on track, but due to industry competition, their profits were low.
The average operating rate of mid-sized producers with annual capacity between 100,000-500,000 mt rose 25.40 percentage points on the month to 46.50%. Most medium-sized enterprises were galvanised structural parts plants, and they resumed production in March. Orders from steel tower companies were stable and the delivery was urgent, ensuring full production; but other sectors did not see any new orders after the CNY holiday.
The average operating rate at small enterprises with an annual capacity of and below 10,000 mt rose by 17.08 percentage points from the previous month to 44.62%. The production time in March increased significantly compared with February, and production basically recovered in March. However, small enterprises were mainly galvanised structural parts enterprises whose new orders were poor, and their operating rates underperformed those of medium and large enterprises.
The average operating rate is estimated at 57.74% in April, up 2.27 percentage points month on month, according to the production plans. In April, the prices of ferrous metals rebounded. Currently, traders need to replenish stocks, and orders are expected to increase significantly. The silent period of the photovoltaic sector has basically ended, and orders are expected to recover in April. The tower sector remains stable.
