SMM Sep. 5: The operating rate of galvanizing producers stood at 50.08% this week, down 5.39 percentage points WoW. On raw material inventory, zinc prices pulled back to levels more acceptable to downstream enterprises, prompting some firms to place orders at low prices. However, actual purchases remained limited as environmental protection measures in northern China just concluded, while previously ordered zinc ingots were still in transit, leading to a slight decline in zinc ingot inventory. The weekly operating rate drop was mainly driven by production and transportation restrictions in the north. Most small and medium-sized factories in Tianjin suspended operations, while large plants operated at around 50% capacity. Some major facilities in Hebei halted production for 2-3 days due to restricted vehicle access, causing excessive inventory buildup of galvanized pipes that couldn't be digested, ultimately forcing production cuts. Consequently, finished product prices rose noticeably WoW. With ferrous metals prices remaining in the doldrums, downstream demand stayed weak. Although downstream enterprises increased next week's production schedule, output won't immediately recover to pre-restriction levels. Despite weak operating rates in north China, consumption in east China remained moderate. Steel tower orders gradually picked up as weather improved, and export orders performed moderately. The operating rate is expected to rebound to 55.27% next week.
