Ferrous metals prices rebound, galvanizing production is boosted upward [SMM Weekly Galvanizing Review]

SMM News on July 4: This week, the operating rate of galvanizing producers was recorded at 56.48%, up 0.27 percentage points WoW. In terms of raw material inventories, zinc prices continued to fluctuate at highs this week, with downstream purchasing sentiment remaining weak. Restocking was mainly driven by rigid demand or long-term contracts, leading to a decrease in zinc ingot inventories. The weekly operating rate increased slightly, primarily due to the following reasons: Following the Central Financial and Economic Affairs Conference this week, the market focused on eliminating outdated capacity. Ferrous metals prices continued to rise, reigniting traders' restocking sentiment. The sales volume of galvanized pipe orders improved somewhat, prompting some enterprises to increase their operating rates or out of concern that high-temperature and rainy weather might cause white rust on products. Some enterprises focused on depleting their inventories, leading to a slight increase in the operating rates of galvanized pipe enterprises and a decrease in finished product inventories. However, coinciding with heavy rain in the Tianjin area, some enterprises were unable to operate normally this week due to low-lying terrain and inability to drain rainwater, affecting production for approximately 1-2 days. Despite this, the overall operating rate showed an upward trend due to the boost from ferrous metals. In terms of galvanized structural components, demand weakened during the traditional off-season. Operating rates of medium-to-large enterprises remained relatively stable, while competition pressure among small enterprises intensified. Treatment charges (TCs) declined, and poor profits forced enterprises to cut production. Some galvanizing enterprises operated only one shift, resulting in a severe polarization in operating rates between large and small enterprises. If ferrous metals continue to perform strongly, it is expected that the operating rate will continue to rebound to around 57.35% next week.

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