Environmental Protection Restrictions Lifted, Galvanizing Enterprise Operating Rates Rebound [SMM Galvanizing Weekly Review]

SMM January 23: This week, the galvanizing industry overall showed a "rise first then fall" trend, with an operating rate of 55.63%, up 2.15 percentage points WoW. Looking at various segments of the industry chain: On the raw material side, affected by a slight correction in zinc prices, downstream enterprises restocked based on rigid demand, coupled with the gradual arrival of long-term contracts, leading to a rebound in zinc ingot inventories at galvanizing enterprises. The increase in the operating rate was mainly driven by three factors: First, the phased environmental protection alerts in Tianjin, Hebei, and other areas were lifted, and enterprises previously affected by production restrictions gradually resumed production. Second, driven by the stabilization and rebound in ferrous metals prices, market trading atmosphere improved. Third, approaching the Chinese New Year holiday, some enterprises moderately increased operating levels to stockpile in advance, driving a WoW increase in finished product inventories. Looking ahead, the weak end-use demand persists. As the Chinese New Year holiday approaches, most enterprises plan to fully halt production by the end of January. Heavy pollution weather alerts have been activated again in the Beijing-Tianjin-Hebei region. Squeezed by both shrinking demand and high production costs, corporate profit margins continue to narrow. The industry's operating rate is expected to pull back to around 54.73% next week, showing a slight downward trend.