Operating rates at Chinese galvanising producers fell last week

In the week ending June 21, the operating rates at galvanising producers recorded 57.31%, down 6.11 percentage points from a week ago. Due to the slight drop in zinc prices at the beginning of the week, dip buying led to an increase in raw material inventories from a week ago. The decline in the weekly operating rate was mainly due to three reasons: First, ferrous metals prices were weak, and thus orders for galvanised pipes fell. Galvanised pipe producers avoided excessive inventories, resulting in a decline in operating rates, especially among large galvanising plants. Finished product inventories also declined. Second, entering the off-season for galvanising, some companies conducted production line maintenance and technical upgrades. Third, the overall galvanising industry still faces an oversupply situation, especially in North China, where competition has intensified and processing fees remain low. Losses have forced companies to reduce or suspend production. Overall, downstream zinc consumption remained weak, with galvanised pipe orders affected by ferrous metals prices and the rainy season, leading to a decrease in order volume. In terms of galvanised structural parts, steel tower orders performed well, while photovoltaic mount orders remained relatively stable, showing a YoY decline. According to national data, infrastructure investment (excluding power) in May fell slightly to 5.7% YoY, indicating overall weakness in infrastructure construction. It is expected that the operating rates at galvanising producers will remain at the current level in the week of June 24.