SMM Survey: When will zinc inventory start to fall amid production resumption? China-wide investment plans in 2022 Attached_SMM

SHANGHAI, Feb. 18 (SMM) — At present, enterprises in zinc downstream sectors have mostly resumed production. At the same time, the impact of the Winter Olympics on northern China was also less than expected. In the future, the air quality in northern China would be a decisive factor for the effective implementation of production restriction policies.

On the other hand, the current stock of raw materials in downstream enterprises is at a low level. This means that when the growing number of orders causes a large part of businesses to return to work, purchases on rigid demand will be directly reflected in social inventory. In the recent days, the market can pay attention to the changes indicated in the rate of resumption of work per week published by SMM as well as the conditions of resumption of work in the terminal sector. Finally, a copy of the number and projected amount of project investments in all provinces in 2022 is attached for your reference.

Galvanized material: According to the latest research from SMM, companies engaged in galvanized material will resume production one by one this week. However, considering the impact of environmental protection and the actual attendance rate of employees, the operation rate is generally low. The takeover rate for some companies ranged from 30% to 40%. In addition, ferrous metal prices have been low recently and the terminal is also on hold. Under such circumstances, the recovery rate is expected to increase next week with the lifting of the environmental protection restriction. Moreover, at the beginning of this Lunar New Year, the potential for the overall development of infrastructure construction in 2022 is not yet evident. The companies said the real development potential should appear in March and April. It should be mentioned that at present, the overall orders for UHV towers in 2022 are relatively robust. As we can see from these facts, some companies have resumed work earlier than peer companies, whose orders are scheduled for May and June.

Zinc alloy die-casting: After the Spring Festival holiday, a small number of enterprises resumed work on the 8th of this month. However, the return to work rate has been relatively low due to labor shortages. In addition, some companies have indicated that they will consume stocks of finished products in recent days while after February 15, their work will return to normal. Last year, many migrant workers stayed behind for the Chinese New Year holiday, and export orders were robust, market demand recovered quickly after the holiday. In the current situation, high zinc prices, a strong wait-and-see attitude in the market and the date of large-scale resumption of work for a number of companies being after February 15 have collectively suppressed weak terminal demand in the short term. . On the other hand, alloy purchases are also cautious because the date of resumption of work of their companies is mainly determined by the evolution of zinc prices and demand for materials.

Zinc Oxide: According to SMM’s research, some zinc oxide companies resumed work one after another this week and most of them opened on February 10th. In addition, some companies have not completed the maintenance of their equipment, so it is expected that production will gradually increase next week. Most companies are working on backorders from last year. Affected by the Winter Olympics and the delay in the resumption of work of their tire terminal enterprises, enterprises in northern China have to resume work later than their counterparts in southern China, and the number of new orders is stable. According to SMM research, most companies don’t have long-term production schedules. Overall orders in 2022 showed no evidence of an increase.

Overall, companies in the downstream zinc sectors have mostly resumed production. At the same time, the impact of the Winter Olympics on northern China was also less than expected. In the future, the air quality in northern China would be a decisive factor for production restriction policies. On the other hand, the current stock of raw materials in downstream companies is at an all-time high. This means that when the growing number of orders triggers the return to work of a large part of the companies, the purchases on rigid demand will be directly reflected in the social inventory. The market will be watching closely for the recovery of the broader market after the CNY holiday.

Finally, a copy of existing and planned investments in projects in all provinces in 2022 is attached for your reference.