Environmental Protection-Driven Production Restrictions in Northern China Lead to Decline in Operating Rates of Galvanizing Producers [SMM Galvanizing Weekly Review]

SMM Nov. 6: The operating rate of galvanizing producers recorded 55.13% this week, down 2.4 percentage points WoW. In terms of raw material inventory, zinc prices continued to rise this week, prompting downstream enterprises to cautiously consume existing stocks due to high prices. Large plants received long-term contract deliveries, leading to a slight rebound in zinc ingot inventories. The reasons for the weekly decline in operating rates were: air pollution occurred in Tianjin, Hebei, Henan, and other regions this week, triggering environmental protection-driven production restrictions. Restrictions were imposed based on environmental protection ratings, with large plants facing 10%–30% production cuts, and some small plants suspending operations, affecting enterprise production. Finished product inventories slightly decreased. Currently, restrictions in Tianjin ended on the 7th, and Hebei and Henan are expected to end soon. Enterprises anticipate resuming normal operations next week. Meanwhile, weather improved in south China, leading some end-user projects to rush to meet deadlines. Orders for greenhouse pipes and transportation improved. Export orders remained relatively stable overall due to tariff negotiations. If environmental protection measures in the north are lifted next week, the operating rate is expected to rebound slightly to 56.97%.