Environmental Protection-Driven Production Restrictions in Northern China Weigh on Operating Rates of Galvanizing Producers [SMM Galvanizing Weekly Review]

SMM August 29: The operating rates of galvanising producers recorded 55.47% this week, down 1.95 percentage points WoW. In terms of raw material inventories, zinc prices pulled back to levels more acceptable to downstream users, prompting some companies to place orders at lower prices. However, due to environmental protection-driven transportation restrictions in northern regions, zinc ingot shipments were temporarily constrained, leading to a slight decline in zinc ingot inventories. The main reasons for the weekly drop in operating rates were: environmental protection-driven transportation and production restrictions affecting most northern areas starting from the 20th, resulting in widespread shutdowns of small plants. Subsequently, transportation issues hindered both raw material deliveries and finished product shipments, forcing companies to voluntarily cut production. With ferrous metals prices remaining in the doldrums and downstream demand still weak, galvanized pipe sales were sluggish. Some companies implemented holiday arrangements or reduced operations to digest inventories, while finished product inventories continued to increase. Galvanized pipe producers remained pessimistic about next week's prices and expected environmental protection-driven production and transportation restrictions to persist until September 4, with planned production schedules still expected to decline next week. For galvanized structural components, overall demand showed no improvement. Domestic and export orders for steel towers remained strong, while orders for PV solar panel mounting brackets, guardrails, and lamp rods stayed weak. Operating rates are expected to pull back to 55.22% next week.