In June 2024, SMM organised a galvanising field trip in Anhui to understand the operating rates of the galvanising market. The specific situations of each company are as follows:
Company A
Basic situation:
1. The company has the highest domestic voltage level iron tower production qualification, primary qualification for steel structure manufacturing enterprises, third-level qualification for general contracting of power engineering construction and professional contracting of steel structure engineering, and fourth-level qualification for installation (repair, test). After decades of development, Anhui Hongyuan has accumulated excellent strength and released strong development momentum in the highly open iron tower industry.
2. The main business includes various power transmission and transformation engineering power towers, substation structures, photovoltaic racking, hot-dip galvanising, etc., with an annual production capacity of 200,000 mt and a hot-dip galvanising capacity of 200,000 mt. It has also undertaken international key projects such as the 500kV transmission line in Ethiopia and the Mera DC project in Pakistan, with product business covering 27 countries and regions in Asia, Africa, and Latin America.
3. Currently, zinc ingot procurement is not limited by brand and will be supplied by traders through bid solicitations by the headquarters in the middle of the year, based on the SMM price + spot premiums and discounts on the day of delivery, generally settled on-site upon arrival.
4. Environmental protection improvements are mainly made in the welding process this year, and the overall environmental protection efforts in Anhui are not as strong as before.
5. June and July are the peak periods for iron tower bidding, with good expectations for iron tower orders in H2. Some iron tower orders will also be distributed to other nearby galvanising plants through bidding.
Company B
Basic situation:
1. The company is located in the Hefei Circular Economy Demonstration Park, with convenient transportation and beautiful scenery. It has an annual hot-dip galvanising capacity of 80,000 mt, a hot-dip galvanising workshop area of over 12,000 square meters, a cargo yard of 15,000 square meters, a net water material workshop area of over 15,000 square meters, and a horizontal hot-dip galvanising pot of 13*2.0*3.0 meters. Supporting facilities include multiple pickling tanks, clean water tanks, cooling tanks, flux tanks, and passivation treatment tanks, with six environmental protection automatic devices. The galvanising workshop is designed by multiple experts, and the production line adopts China's production process technology—"single-track crane", which is flexible in operation, automatic lifting, capable of multi-branch and multi-line free operation, high work efficiency, and reliable braking, ensuring the quality of hot-dip galvanising structural parts. The company mainly serves power towers, communication towers, electrical railways, highway protection, street light rods, ship components, construction steel structure components, photovoltaic racking, intelligent parking equipment, etc.
2. A new 100,000 mt production line is expected to be added next year, with a 13-meter pot. The production line will mainly be semi-automated, updating production equipment to reduce some costs. The new production line will better meet environmental protection requirements and reduce pollution emissions. On the other hand, the semi-automated production line can appropriately reduce some labour cost reliance.
3. The zinc consumption per ton for iron towers is about 35 kg, and iron tower orders are mainly obtained through bidding, primarily for supporting iron tower orders for Hongyuan due to the proximity, which makes transportation cheap and convenient. A new round of bidding will start in June, and the current iron tower processing fee is about 1,200-1,400 yuan/mt.
4. The zinc consumption per ton for iron towers is about 35-39 kg, depending on specific requirements.
5. In terms of overall galvanising consumption, only iron towers are relatively good. Orders from photovoltaic racking, scaffolding, and traffic guardrails sectors have dropped significantly this year. The specific consumption situation of the galvanising industry in H2 will depend on the implementation of local government special bonds.
Company C
Basic situation:
1. The company was established in May 2010, covering an area of 100 acres. The first phase built a production line with a capacity of 50,000 mt, mainly engaged in hot-dip processing business, belonging to the manufacturing industry. The company is located in the Tongyang Town Industrial Park in Chaohu City, 25 km east of Chaohu, 32 km west of Hefei City, and the factory is located on the golden section of Heyu Road, adjacent to National Highway 105 and He-Wu Expressway, with advantageous geographical location and convenient transportation. Huiyuan is equipped with a large zinc pot, with dimensions of 13 meters in length, 2 meters in width, and 1.5 meters in depth, and a large cargo yard for sorting and packing angle steel, at the same level.
2. The main zinc ingot brand used is JCC, with a monthly zinc ingot demand of about 150-200 mt. The general method is futures pricing plus spot premiums and discounts, including freight, and payment upon delivery. Due to high zinc prices and funding problems, they generally purchase one truckload of zinc ingots at a time.
3. The zinc consumption per ton for current iron tower orders is about 35 kg.
4. Currently, the main difficulty is recruiting workers, leading to an inability to operate at full capacity. Workers currently work in two shifts, each shift lasting 10 hours.
5. A new round of iron tower order bidding will start in June, and the current orders can be scheduled until September. If successful, the output for H2 is expected to increase further.
Company D
Basic situation:
1. The company was established on April 28, 2016, committed to the research of metal surface treatment processes and steel galvanising business, with a registered capital of 5 million yuan. The company has a galvanising workshop of 5,000 square meters, a production processing workshop of 4,000 square meters, and a cargo yard of 3,000 square meters. A new hot-dip galvanising environmental production line with a zinc pot of 9.5 meters (length) × 1.8 meters (width) × 3 meters (depth) was built, with an annual galvanising capacity of 50,000 mt. The company has rich experience in power iron accessories, wind power equipment supports, power poles and tower parts, highway sign poles, solar tracking mounts, export agricultural irrigation pipes, export bridge-related supporting parts, infrastructure embedded parts, and steel structure main parts.
2. The current power business capacity is 20,000 mt, traffic 10,000 mt, photovoltaic racking 6,000 mt, and overseas orders are also based on domestic customer requirements, currently about 3,000 mt.
3. Compared to other regions, large-scale orders such as guardrails and poles do not have cost advantages, and other plants have more mature technology. Their future advantage lies in traffic sign poles, which cannot be mass-produced. The diversity of products will give them an advantage, and the galvanising plant plans to expand into traffic sign poles and urban guardrails.
4. The current iron tower processing fee is about 1,000-1,400 yuan/mt.
Company E
Basic situation:
1. The current total capacity is about 30,000 mt, with a monthly output of about 1,000 mt. The galvanising company was established mainly to serve the galvanising needs of the headquarters' engineering projects. Initially, it mainly produced scaffolding, and later began to process structural parts on an OEM basis.
2. The monthly zinc ingot usage is about 60 mt, mainly using brands such as Baiyin and JCC, with cargo pick-up from warehouses in Wuhu, using the SMM price on the day of the transaction plus spot premiums and discounts. Since settlement with customers also uses the SMM price on the day, they try to minimize profit differences caused by different prices.
3. They operate in one shift, 10 hours per shift. Currently, their recruitment situation is good, with workers' basic salaries at 4,000-5,000 yuan, and take-home pay at 7,000-8,000 yuan. Workers are paid basic salaries even during shutdowns.
4. The main problem is the geographical location, leading to mostly nearby structural parts OEM orders. The fierce competition in processing fees among plants in the market has compressed processing profits to the point of losses.
Company F
Basic situation:
1. The annual capacity is about 17,000 mt, mainly producing bolts, nuts, and other fasteners and standard parts. Currently, the overall operating rate is only 50%, with an output of 1,400 mt, of which exports account for 800 mt and domestic orders for 600 mt. Among them, 700-800 mt are produced by hanging galvanising, with zinc ingot consumption of about 300 mt/month.
2. Currently, the competition in processing fees in the domestic photovoltaic racking market is too fierce, with thin order profits, so they have abandoned the photovoltaic racking market and started to develop foreign trade businesses such as iron towers and aircraft nuts. In terms of exports, orders from Vietnam are mainly contributed by iron tower projects; there is also some demand in Europe, including iron towers and aircraft screws, with both regions preferring large nuts. The zinc consumption per ton for large and small nuts is currently 20-24 kg/mt and 18-20 kg/mt, respectively.
3. Due to process limitations, they cannot accept high-strength process orders, as the precision is not yet up to standard. However, they have a good reputation for international orders and have a positive outlook for H2.
Summary: This field strip focused on iron tower companies. Overall, orders from iron tower performed well within the year, with companies having scheduled production for 3 months to one year. They hold a relatively optimistic attitude towards domestic UHV and overseas exports. The overall raw material inventory is mainly for 3 days of production. The zinc consumption per ton is mainly 32-39 kg with main zinc ingot brands of JCC and Baiyin. Iron tower processing fees range from 1,000 to 1,400 yuan/mt.
