Northern Environmental Protection Impact Weakens Galvanizing Operations [SMM Galvanizing Weekly Review]

SMM December 17: This week's operating rate of galvanising producers recorded 56.08%, down 2.31 percentage points WoW. On the raw material inventory side, zinc prices pulled back slightly at the beginning of the week, leading to moderate restocking by northern enterprises. However, due to environmental protection measures, the delivery time of zinc ingots to plants was affected, and inventories in east China were relatively tight. Galvanising enterprises in east China mainly conducted just-in-time procurement, with a slow shipment pace. Overall, zinc ingot inventories declined. The reasons for the weekly operating rate decrease were: multiple northern provinces such as Hebei, Tianjin, Shandong, Anhui, and Henan experienced air pollution, triggering environmental protection warnings. Transport vehicles were required to meet China VI or new energy standards. Enterprises implemented production cuts based on environmental protection ratings, with many small plants reducing or halting production. Although some large plants had no production restrictions, vehicle control measures affected finished product transport, leading to an increase in finished product inventories at enterprises. Due to excessively high finished product inventories, production was cut accordingly. Overall, the operating rate declined. In contrast, demand in south China remained relatively resilient, with steel tower performance moderate, and export orders still quite good. No notice of the end of environmental protection measures has been received yet, and enterprise production schedules have not increased significantly. The operating rate is expected to rise slightly to 56.14% next week.