Seasonal lull lowers operating rates at zinc oxide producers to 48.01% in Jul

SHANGHAI, Aug 13 (SMM) – Operating rates across Chinese zinc oxide producers decreased 1.97 percentage points from June to stand at 48.01% in July, as downstream demand weakened in a slow season, an SMM survey showed on Tuesday August 13. The rate was 3.36 percentage points lower from July 2018.

The survey covered nearly 30 producers, mainly in areas of Jiangsu, Shandong, Hebei, Shanghai, and Liaoning, with total capacity of 518,600 mt on an annualised basis.

Downstream demand from the car market cooled as wholesale and retail of passenger vehicles in the first four weeks of July fell 20% and 16%, respectively, from the same period a year ago, according to the China Passenger Car Association (CPCA). Industrial data showed that operating rates across domestic producers of semisteel tyre shrank year on year in July. 

Zinc oxide producers also slowed operation in July as tight supply drove up prices of zinc slag, which is used to produce zinc oxide. Prices of zinc hovered above the 19,000 yuan/mt level last month. 

SMM expects operating rates across zinc oxide producers in China to fall further to 46.81% in August as the seasonal lull continues.