SMM

SHANGHAI, Sep 24 (SMM) - Last week, the average operating rate of galvanising enterprises dropped to 69.95% on a weekly basis. The high zinc prices, combined with wide spread between the SHFE front-month and next-month contracts, kept the premiums at high levels. The enterprises were cautious about stockpiling and mainly purchased for long-term orders and on rigid demand. The operating rates of galvanised pipe producers dropped under the influence of falling ferrous metal prices. The poor sales resulted in increasing finished product stocks. Fortunately, the mid-October remains the high season for the construction of terminal projects, so the purchasing demand for galvanised pipes was basically maintained, and the decline in operating rates was limited. The overall orders for galvanised structural parts improved, but there was still a vicious competition among enterprises. The price gap between south and north China widened, and the room for profits was constrained. It is worth noting that a significant increase in orders stemmed from agricultural greenhouse sector thanks to its high season, but the increase was not sustainable considering the seasonal change. Besides, it is learned that the pandemic had limited impact on the production of galvanising producers. The transportation in some areas might be delayed, but no major loss will be caused. It is expected that the operating rates of galvanising producers will rise trailing the rebounding steel prices.