According to the new sample with a total capacity of 39.02 million mt/year, the average operating rate at galvanising plants stood at 59.20% in April, up 3.73 percentage points from the previous month and down 0.18 percentage point from the same period last year. Output was 1.93 million mt.
According to the previous sample, the average operating rate was 60.09% in April, up 5.06 percentage points month on month but down 8.84 percentage points year on year (involving a capacity of 10.81 million mt). The output was 542,800 mt.
Galvanising plants produced for the whole month in April. During the Qingming Festival, most companies remained in normal production. In March, some companies just resumed production in the middle of the month. In March, the prices of ferrous metals continued to fall, thus the sales volume of companies was lower than expected, leading to low operating rates. In April, the prices of ferrous metals rose, and orders of galvanised pipe plants improved, increasing operating rates. In terms of raw material inventory, as zinc prices continued to rise in April, galvanising plants purchased as required out of cost considerations, and the inventory of zinc ingots decreased. Compared with year-ago levels, orders from infrastructure and real estate sectors were poorer, and orders from the photovoltaic sector were also lower than expected. Therefore, operating rates declined year-on-year.
The average operating rate is estimated at 59.13% in May, down 0.07 percentage point month on month, according to the production plans. In May, ferrous metals prices fell back, while zinc price continued to run at a high level. Some companies may consider reducing production. There is no obvious improvement in downstream consumption, and transportation infrastructure orders are not strong despite the peak season. These, coupled with the impact of the Labour Day holiday, will maintain operating rates in May.
