[SMM analysis] galvanizing start-up rate in June is expected to stabilize in July compared with the previous month.

SMM, July 12 / PRNewswire-Asianet /-

According to SMM research, the operating rate of galvanized enterprises in June was 76.4%, down 4.7% from the previous month and 4.7% from the same period last year. Under the influence of the high temperature in the north and the rainy season in the south in June, the outdoor operation began to be suppressed, the order of structural parts decreased, the galvanized consumption of iron tower continued to improve, and the storage area of rail delivery orders differentiated. However, after the galvanized pipe consumption was transferred to the off-season, it became more difficult to sell, and the high finished product inventory made the enterprise continue to adjust the inventory operation by controlling production, and the output continued to decline. On the other hand, with the continuous negative growth of automobile production and sales, the end of superimposed household appliance production into the peak sales season, the demand for galvanized sheet is further weakened, the cost upside down pressure is increased, and the overall galvanizing consumption has no bright spot. The operating rate has accelerated into the mid-year low, and recorded a negative growth compared with the same month.

According to the enterprise production plan, the galvanizing start-up rate is expected to be 76.9% in July, 0.4 percentage points higher than the previous month, down 1.5 percentage points from the same period last year, the low level has stabilized, the demand slowdown has basically reached the extreme in June, the production adjustment of galvanized enterprises has been basically completed, and the start-up rate in July has not been further weakened, but not as good as the same period last year.

First, under the influence of the high temperature in the north and the rainy season in the south, the outdoor operation slows down, the demand for zinc consumption weakens obviously, the scope of influence covers infrastructure, real estate and other fields, and the demand for galvanized sheet, galvanized pipe and galvanized structural parts is suppressed. Among them, the intuitive impact brought by galvanized pipe enterprises is that it is more difficult to remove the inventory of finished products, and it is difficult to enhance the subjective production enthusiasm. If there is no greater bearish in July, galvanized pipe enterprises are expected to be stable for the time being.

Second, in addition to the national power grid supporting galvanized structure demand continues to be good, galvanized structure demand release exists regional differentiation, among which the main disturbance factor is still the capital level, because the capital problem part has signed the cooperation can not be implemented, so that the enterprise production continues to be unsaturated, the start-up rate of small and medium-sized enterprises recorded a slight decline compared with the previous month.

Third, most regions began to implement the transformation from national five to national six standards since July 1, and automobile manufacturers gave priority to clearing national five stocks, but this could not bring about an accelerated recovery in short-term production and stronger long-term guiding significance. Short-term demand for galvanized sheet for cars will continue to be weak, and the cold and hot price spread is still low and does not pick up as evidence.

Overall, under the effect of the off-season effect in July, if there is no greater negative drag, galvanizing start-up, which has fallen to a relatively low level, is expected to stabilize.