SHANGHAI, Jul 13 (SMM) – The operating rate at zinc oxide plants across China in June fell 3.71 percentage points from the same period last year due to the Shanghai Cooperation Organisation (SCO) Summit in Shandong province and environmental probes in Jiangsu province, SMM research found.

In June, the rate stood at 54.67%, up 0.29 percentage point from May. 

The research covered nearly 30 zinc oxide plants in China, mainly located in Jiangsu, Shandong, Hebei, Shanghai, and Liaoning areas, with total capacity of 518,600 mt. 

Both production and sales of vehicles in China maintained their stable year-on-year increases in June, according to data from the China Association of Automobile Manufacturers (CAAM).

China's vehicle sales reached 2.27 million units in June, down 0.6% from a month ago but up 4.7% from a year ago. This brought the January-June vehicle sales to 14.07 million units, up 5.6% year on year. The year-on-year growth rate was 0.83 percentage point higher from the same period last year. The vehicle production stood at 2.29 million units in June, down 2.3% on the month but up 5.8% on the year. In the first six months of this year, total vehicle production amounted to 14.06 million units, up 4.2% year on year.

Production in Shandong recovered after the SCO Summit ended while production in Jiangsu remained under pressure as environmental probes lasted for a month. Routine summer maintenance on furnaces at some plants also suppressed operating rates. On the demand front, orders at zinc oxide plants are likely to receive impact, in the near term, from tariffs imposed by the Trump administration on rubber and vehicles imports. 

SMM expects the operating rate to inch up close to 1 percentage point, to 55.59%, in July as some large plants resume production after maintenance. Without a surge in orders from downstream consumers this year, rates are likely to remain lower than last year.