Prospects Bright for Applications of Galvanized Steel in Automobile and Construction Industries

SHANGHAI, July 19 (SMM) -- A recent SMM survey of 41 zinc smelters (total capacity 5.025 million mt/yr; idled capacity 80 kt/yr) revealed the following insights:
1) Operating Rates 
According to the survey, output at the 41 zinc smelters during June was 290 kt, with the average operating rate falling for two consecutive months to settle at 70.3% during June, a new low since March 2009.&nbsp;
Operating rates at the 41 zinc smelters experienced declines by different degrees, with operating rates at smelters with capacity between 100-200 kt/yr (including 100 kt/yr and 200 kt/yr) experiencing the largest decline, falling 16.1%, to 67.1%.&nbsp; Operating rates at larger smelters with capacity above 200 kt/yr also fell during June, to 80.66%, while operating rates at smelters with capacity between 20-100 kt/yr fell nearly 12%, to 57.58%.
The third quarter is the traditional low demand period for zinc smelters.&nbsp; Downstream producers will usually receive fewer orders during this period, but zinc production may also be affected by weather conditions or electricity shortages, so many smelters choose to conduct&nbsp; mid-year unit maintenance, which also has a strong negative impact on overall zinc output.&nbsp; For example, Chifeng NFC Kumba Hongye Zinc Company (110 kt/yr), Baiyin Nonferrous Metals Company (190 kt/yr), Gansu Baohui Industrial Group (60 kt/yr), and Huludao Zinc Industry Company (390 kt/yr) all conducted some form of unit maintenance during June.&nbsp;&nbsp;
2) Raw Material Inventories 
Consecutive declines in monthly operating rates at domestic zinc smelters during May and June are closely linked to tight raw material supply. According to a SMM survey in May, over 33% of smelters said raw material supply was very tight. This number was significantly higher in June, with nearly 50% of smelters now saying raw material supply is tight, with raw material availability affecting normal operations to some extent. In addition, only 2.6% of smelters say availability of domestic and imported raw materials was sufficient. The remaining 52.6% of smelters say raw material inventories are normal, but also report growing difficulties in purchasing domestic zinc concentrate.
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