Weaker demand, high costs further lower operating rates at galvanising plants in May

SHANGHAI, Jun 12 (SMM) – Chinese galvanising plants operated at a lower rate in May, as weaker end-market consumption from a peak season in March-April kept inventories of finished goods at plants high.

Infrastructure construction failed to boost demand for galvanised products in the second half of the second quarter, while demand from rail transportation and iron tower remained upbeat.  

High costs for ferrous materials kept galvanising plants in losses, which also jeopardised production enthusiasm across the sector.

SMM data released on Monday June 10 showed that the average operating rate across Chinese galvanising plants stood at 81.13% last month, down 5.7 percentage points from April and 5.46 percentage points from May 2018.

Demand is expected to further weaken in June, as the hot weather and heavy rainfall affect outdoor operations.

Operating rates across galvanising plants are expected to slip 2.23 percentage points month on month to stand at 78.9% in June, down 2.26 percentage points year on year.