SMM

SMM January 16: This week, the operating rate of the galvanising industry was 53.48%, down 0.91 percentage points WoW. Raw material side, zinc prices continued to climb to levels unacceptable to downstream enterprises, leading to weak purchase willingness, with most focusing on digesting existing inventory, and zinc ingot inventory at galvanising enterprises declined. The main reasons for the drop in operating rate were: environmental protection warnings were reissued in Tianjin and Hebei, with large galvanising enterprises in Tianjin facing production restrictions of up to 50%, some small enterprises even halted production entirely, and four cities in Hebei also implemented strict environmental protection-related controls, leading to enterprise production restrictions; demand side remained persistently weak, most enterprises reported a significant contraction in orders after the New Year's Day holiday, some enterprises had already entered equipment maintenance and holiday shutdowns early; zinc prices rose beyond expectations, causing a severe inversion between production costs and selling prices for small galvanising plants, forcing them to adopt production cuts or shutdowns. Looking ahead, although the current environmental protection-driven production restriction policy is expected to end this week, and affected enterprises will gradually resume production, under the dual constraints of sluggish end-use demand and enterprises being under profit pressure, the recovery in operating rates will be limited. Comprehensive assessment indicates the industry's operating rate is expected to rebound slightly to around 55.79% next week.