How did the galvanizing operating rates perform regionally at the "tail end of the peak season"? [SMM Analysis]

SMM, November 20: Entering the traditional peak season, the series of stimulus policy packages announced by the state at the end of September injected a strong boost into the consumption side. The galvanizing operating rates in October also improved. So, how did the specific regional performances fare?

In October, the operating rates in south China declined significantly, mainly due to the suppression from rising zinc ingot prices. Since many galvanising enterprises in south China are tolling businesses, they are greatly affected by zinc prices. The surge in zinc prices without significant improvement in TCs led to a decline in profits, forcing enterprises to reduce or halt production. However, entering November, the weather in south China improved, and it also marked the peak installation period for agricultural greenhouses in the south, so the operating rates are expected to increase in November.

In October, the overall operating rate in north China increased significantly. North China mainly produces galvanized pipes and is significantly influenced by the price trends of ferrous metals. Under the stimulus of policies at the end of September, the prices of ferrous metals continued to rise in October. Traders were optimistic about its future trends and actively replenished their inventories. The shipments from galvanizing plants improved significantly, and they were optimistic about future orders, driving the overall operating rate in north China upward. Although the north was somewhat disturbed by environmental protection-driven production restrictions, most large enterprises, being A-grade, were less affected, and some orders flowed into these large enterprises.

In October, the operating rate in east China also increased. The galvanizing plants in east China mainly produce structural components. Previously, the performance of steel tower enterprises was good, maintaining a high operating rate. Additionally, entering October, many places in the north were under environmental protection measures, causing some orders to flow into the south, leading to an increase in the operating rate.

Overall, as November marks the tail end of the peak season, many enterprises saw an improvement in orders, and the operating rates are expected to increase compared to October.