SMM, August 31:
The galvanized industry remained in the off-season in August, with overall operating rates still weak compared with the same period last year. At present, there are still no clear signs of a recovery in consumption. How will galvanized industry operating rates perform in September?
In August, galvanized industry operating rates remained generally weak. End-user consumption was average, galvanized pipe shipments were sluggish, and finished-goods inventories increased, prompting some companies to reduce production in the latter part of the month. Meanwhile, high temperatures and typhoons continued to affect production, transportation, and downstream construction activities in some regions. On the raw material side, zinc prices were generally strong in August, leading galvanized producers to remain cautious in procurement, while zinc ingot inventories stayed at relatively low levels. Some companies made purchases during price dips, but inventory replenishment remained relatively slow due to delivery lead times, with overall procurement still focused mainly on immediate production needs.
Entering September, as the impact of high temperatures and typhoons gradually eases, some companies are expected to resume normal production. In addition, with the traditional peak season approaching, some galvanized producers may have demand to replenish raw material and finished-goods inventories, which could provide some support for operating rates. Meanwhile, if ferrous metal prices stabilize and rebound, improved market sentiment could provide some support for downstream purchasing.
However, there is still a lack of significant growth in end-user demand. Galvanized pipe shipments remain sluggish, the recovery in property-related demand has been slow, and infrastructure and export orders have also remained relatively limited. Whether the traditional peak season will translate into actual demand growth remains to be seen. Overall, galvanized industry operating rates are expected to recover slightly from August in September, but the YoY weakness is likely to persist. The overall room for improvement remains limited, and attention should continue to be paid to the release of downstream orders.
