Downstream demand is weak, and the galvanizing operation rate is declining [SMM Weekly Galvanizing Review]

SMM News on July 31: This week, the operating rate of galvanising producers stood at 56.77%, a decrease of 2.64 percentage points WoW. In terms of raw material inventories, zinc prices continued to pull back this week, but downstream buyers remained cautious. On Thursday, zinc prices fell to a low level, with many downstream buyers placing orders, but actual transactions were limited, resulting in a slight decrease in zinc ingot inventories. The main reasons for the weekly decline in the operating rate were as follows: Ferrous metals prices jumped initially and then pulled back, with galvanized pipe traders experiencing poor sales. Galvanized pipe orders weakened, and finished product inventories increased. Some galvanized pipe enterprises were not optimistic about the subsequent ferrous metals prices. To digest inventories, they implemented production holidays to prevent excessive inventory buildup of finished products, leading to a significant decline in the operating rate. For galvanized structural parts, affected by extreme weather conditions, terminal operations were not ideal, and end-use demand was weak. Except for steel tower orders, which showed resilience, other orders remained unfavorable. Some small enterprises also arranged production holidays. Given the significant increase in production schedules at some large factories next week, the operating rate is expected to rebound to around 57.65% next week.