SHANGHAI, Apr. 15 (SMM) – Average operating rate at Chinese galvanizers rose by 24.7% to 84.5% in March due mainly to demand improvement, Shanghai Metals Market survey revealed.
The enterprises surveyed by SMM are galvanized steel tower, galvanized plate, sheet, strip and tube/pipe producers, which are located in north, east and south China.
As the weather improves, infrastructure construction, including highways and power grid, increased noticeably, causing orders of galvanized guard rail and lamp post to grow. The increase in production at construction sites in March also allowed orders of water gas pipeline and construction materials to increase. Galvanized vessel pipe demand from the shipbuilding sector was also stable. Some galvanizers reported brisk orders from high-speed train.
Galvanizers were cautiously purchasing raw materials due to weak zinc prices. But some galvanizers increased purchasing at lower prices since zinc prices leveled out in late March.
The SMM survey found that some large galvanizers maintained raw materials for about 1 month of production, and some raised inventories for 40 days of production due to optimism. Some enterprises maintained stocks between 1-10 days of production, while some, with tight liquidities, were wary of building high stocks. The galvanizers that have long-term contracts with smelters maintained inventories at safe levels.
SMM foresaw that average operating rate at galvanizers would hold stable in April due to steady demand from infrastructure construction.