Downstream consumption is weak, and the operating rate of zinc oxide plants is declining [SMM Weekly Review of Zinc Oxide]

SMM reported on June 27:

     This week, the operating rate of zinc oxide enterprises was recorded at 58.72%, down 0.28% MoM. On the raw material side, due to the rise in zinc prices and the weakening of downstream consumption this week, zinc oxide enterprises reduced their procurement. Meanwhile, the outflows from warehouses of these enterprises slowed down. As a result, raw material inventory decreased MoM, while finished product inventory increased MoM. Regarding terminal orders, rubber-grade zinc oxide terminal tyre factories are still facing significant inventory pressure. Meanwhile, the end-use demand for chemical products is also in the doldrums. The demand for feed-grade zinc oxide has also started to weaken recently. However, the orders for electronic-grade zinc oxide, driven by the power grid, still show good consumption performance, with robust demand mainly concentrated in north China regions such as Henan and Shanxi. Recently, terminal demand has gradually pulled back. Although some enterprises are still maintaining relatively normal production, due to weak demand, enterprise inventory has gradually increased. If terminal demand continues to weaken in the future, it is expected that the operating rate of zinc oxide enterprises will continue to decline. It is projected that the operating rate of zinc oxide enterprises will be recorded at 58.46% next week.

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