As expectations for the peak-season demand in the “Golden March” gradually begin to materialize, galvanizing operating rates are rising. Can downstream consumption sustain its peak-season performance going forward?

[Consumption Expectations Were Gradually Realized, Operating Rates of Galvanising Producers Continued to Increase]: This week, the operating rate of the galvanizing industry was 59.7, up 6.69 percentage points WoW. Raw material side, zinc prices pulled back sharply this week, galvanising enterprises actively fixed prices to stockpile, and zinc ingot inventory at galvanising enterprises increased significantly.

According to SMM research, most galvanising enterprises resumed production between the tenth day (February 26) and the sixteenth day (March 4) of the first lunar month. Small and medium-sized enterprises generally resumed operations after the Lantern Festival (March 2), with an average holiday duration of around 21 days.

SMM September 12 News: After the environmental protection vehicle and production restrictions ended, premiums and discounts in the Tianjin area remained low, and the Tianjin zinc ingot market performed sluggishly. How will premiums and discounts move going forward?

In May, the operating rate in North China dropped back slightly. Enterprises in North China mainly produce galvanized pipes, and the operating rate of galvanized pipes also declined slightly. The main reasons were the drop in ferrous metals prices starting from mid-to-late May, the lack of significant improvement in real estate projects, the weakened demand affected by the rainy season in south China, the poor sentiment of traders in restocking, and the overall weakening of orders for galvanized pipes, which led to a reduction in enterprises' operating rates.

[SMM News] In May, the operating rate in North China dropped back slightly. Enterprises in North China mainly produce galvanized pipes, and the operating rates of galvanising producers declined slightly. The main reasons were the decline in ferrous metals prices starting from mid-to-late May, the lacklustre performance of real estate projects, the weakened demand affected by the rainy season in south China, the poor sentiment of traders in restocking, and the overall weakening of orders for galvanized pipes, which led to a reduction in the operating rates of enterprises.

[Galvanizing operating rates maintain fluctuating trend, with bearish outlook for subsequent demand]: This week, the operating rate of galvanising producers was recorded at 60.04%, an increase of 0.48 percentage points WoW. In terms of raw material inventory, zinc prices broke through and fell to a level more acceptable to downstream buyers this week. Downstream buyers increased restocking at lower prices, leading to an increase in zinc ingot inventory.

May marks the tail end of the peak season, with downstream consumption gradually weakening and operating rates in north, east, and south China experiencing varying degrees of decline. How will the operating rate trend in June?

[Galvanising Enterprises Resume Normal Operations After Holiday, Operating Rates of Galvanising Producers Rise]: This week, the operating rates of galvanising producers reached 59.58%, up 7.41 percentage points WoW. In terms of raw material inventory, zinc prices fluctuated this week. Downstream enterprises mainly relied on long-term contracts or only purchased based on immediate needs, leading to a slight decline in zinc ingot inventory.

[Galvanising Enterprises Mostly Arranged Holidays During Dragon Boat Festival, Operating Rates of Galvanising Producers Declined]: This week, the operating rate of galvanising producers was recorded at 52.17%, a decrease of 9.86 percentage points WoW. In terms of raw material inventory, zinc prices fluctuated upward this week. Prices pulled back at the beginning of the week, prompting some downstream enterprises to restock slightly, leading to a slight increase in zinc ingot inventory. The main reason for the decline in operating rates this week was that the end of the week coincided with the Dragon Boat Festival holiday, with most enterprises arranging holidays lasting 1-2 days, and a few enterprises arranging a 3-day holiday, which affected production.