Operating rates of galvanising producers decline, demand gradually weakens [SMM Galvanizing Weekly Review]

SMM June 20: This week, the operating rates of galvanising producers stood at 58.60%, a decrease of 1.46 percentage points WoW. In terms of raw material inventories, zinc prices fluctuated this week, with weak downstream demand. Restocking was mainly driven by immediate needs or long-term contracts, leading to a slight decline in zinc ingot inventories. The weekly operating rate pulled back, primarily due to the following reasons: ferrous metals prices maintained a fluctuating trend with no significant fluctuations this week, resulting in fewer restocks by traders and a decrease in orders for galvanized pipes. As it was raining in both the north and south of China, with the south entering the rainy season, construction was affected. Additionally, galvanized pipe enterprises were concerned that high temperature and humidity would cause white rust on stored galvanized pipes, prompting them to reduce production and lower inventories. Finished product inventories experienced a slight destocking. For galvanized structural components, demand weakened during the traditional off-season, and export orders also declined. Although there were continuous tenders for steel tower orders, the pace of end-user demand slowed down, leading to a decrease in enterprise production. Some enterprises had already started operating only day shifts or night shifts, facing intense competitive pressure and declining profits, which forced them to reduce production. In Shandong province, environmental protection checks were conducted, with some enterprises reducing or halting production due to environmental protection requirements. It is expected that the operating rate will continue to pull back to around 57.85% next week.

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