Falling Zinc Prices Fuelled Zinc Alloy Consumption

SHANGHAI, Feb 13 (SMM) - Last week, the average operating rate of galvanising enterprises increased to 76.46% on a weekly basis.

When zinc prices fell to around 23,300 yuan/mt, the downstream enterprises were active in purchasing, and the in-plant raw material stocks rose significantly. Most galvanizing plants already resumed normal production last week except very few that were still closed under maintenance. On the whole, operating rates of galvanised pipe producers were higher than those of galvanised structural parts manufacturers. This is because that the rising steel prices pre-holiday accelerated the consumption of finished product inventory, while the restocking demand was high from both terminal enterprises and distributors post the holiday. At the same time, as the steel prices were close to the costs of steel mills, the market was generally bullish. As such, galvanising companies were willing to build up the finished product stocks.

But the orders did not increase last week but re expected to grow soon as terminal enterprises just resumed their operation. However, if the orders fail to meet the expectation in the near future, the high inventories may force enterprises to cut the production. The operating rates of galvanising plants are expected to grow further this week.