SHANGHAI, Jun 27 (SMM) -
The average operating rate of galvanising plants dropped to 53.6% WoW last week. Zinc prices continued to fall last week, and the enterprises purchased on the dip and their raw material inventory increased.
Although steel prices have stopped falling, the terminal real estate and infrastructure industry still remained sluggish. Coupled with serious flooding in the south, transportation and outdoor construction were restricted. Most large factories in the north were closed for 2-4 days amid the poor sales of galvanised pipe and high finished product inventory.
Some enterprises in the south even planned to suspend the production for months in order to consume finished product inventory because of the sluggish real estate industry. In terms of galvanised structural parts, the actual projects launched were limited amid financial strains of local government. As the independent products manufacturers could not produce at full capacity, the processing enterprises received even fewer orders, and orders of scaffolding remained weak.
With low profits of the current processing fees, enterprises were less active in production. It is expected that the operating rates of galvanising enterprises may improve this week as the enterprises that suspended the production before will resume work.