1. Report Industry Investment Rating - Zinc: Bearish [5] 2. Core Viewpoints of the Report - Zinc demand is weakening, and it's unlikely to improve before the peak season. The decline in demand mainly comes from small and medium - sized factories, while large factories will maintain production to support rigid demand. The profitability of enterprises is deteriorating, and the industry's prosperity is declining. In terms of investment, a high - short strategy is recommended, along with positive spreads arbitrage in the medium - term [1][2][38] 3. Summary According to the Directory 3.1 Research Objects - The research focused on galvanizing and hot - dip galvanizing alloy enterprises in Tianjin. The sample mainly included medium - to large - scale production enterprises, covering galvanized pipes, galvanized sheets, and hot - dip galvanizing alloy enterprises, with terminal customers in various fields such as real estate, infrastructure, home appliances, and exports [12] 3.2 Core Research Conclusions and Analysis - **Early Demand Resilience and Bright Coated Orders**: At the beginning of the year, the demand was relatively strong, especially for coated orders. However, recently, the orders of downstream customers have weakened significantly, and the finished products of manufacturers have started to accumulate inventory [14] - **Weakening Galvanizing Demand**: Most manufacturers are cautious about future demand. Galvanizing orders are unlikely to recover significantly during the off - season from June to August. Zinc - aluminum - magnesium orders depend on policy support, and export orders are expected to weaken. Although there may be a restocking effect in late August and an improvement in orders during the peak season, manufacturers are not optimistic about the support strength and sustainability [15] - **Deteriorating Corporate Profits**: Galvanizing processing fees have been declining, and the competition among enterprises is intense. The zinc cost accounts for over 40% of the total cost. This year, most galvanizing production lines are operating at a loss, and the cash flow of small and medium - sized factories is under pressure [26] - **Limited Downstream Purchasing Power**: Downstream large factories maintain stable raw material inventories, while small and medium - sized factories have rigid - demand inventories. Due to the off - season and inventory accumulation, the downstream's willingness to purchase raw materials is limited [27] 3.3 Investment Recommendations - Adopt a high - short strategy. When there is a boost from macro - sentiment in the short term, consider adding positions on rebounds, but also pay attention to the support at previous lows. For arbitrage, positive spreads arbitrage is recommended after the end of the reverse spreads trend. In the medium - term, maintain a positive spreads arbitrage strategy between domestic and foreign markets [38] 3.4 Research Minutes - **Galvanizing and Zinc Alloy Enterprise A**: It mainly produces cold - rolled sheets, galvanized sheets, and zinc - aluminum - magnesium alloys. The annual production capacity is 3 million tons, with about one - third for export. The company maintains a high - level of production, but the photovoltaic orders are poor. It expects orders to improve in the later stage of the third quarter [44][45] - **Galvanized Pipe Enterprise B**: It mainly produces welded pipes and galvanized pipes. The annual production capacity is 600,000 tons of welded pipes and 160,000 tons of hot - dip galvanized pipes. The company's orders have been declining for years, and it is operating at a loss this year. It expects a limited improvement in orders in the second half of the year [50][51] - **Galvanized Pipe Enterprise C**: It is a leading steel pipe enterprise. The galvanized pipe production accounts for about half of the national total. The company's orders are decreasing year by year, and it is cautious about the improvement in the peak season [56][57] - **Galvanizing Enterprise D**: It mainly produces hot - dip galvanizing alloys and coated sheets. The annual production is about 250,000 tons. The company is operating at 50% capacity due to weak orders. It expects the peak - season demand to depend on the restocking in August [64][65] - **Galvanizing Alloy Enterprise E**: It focuses on zinc - aluminum - magnesium and coated orders. The company's coated orders are strong, but the zinc - aluminum - magnesium orders have declined significantly since June. The profitability mainly comes from futures operations and spot hedging [71][72] - **Galvanizing Enterprise F**: It mainly produces galvanized products. The company is operating at full capacity and is optimistic about its own development, but not about the industry as a whole. The processing fee is about 200 yuan/ton, with a profit of 10 - 20 yuan/ton [78][79] - **Galvanized Sheet Enterprise G**: It focuses on processing and selling strip steel, color plates, and building decoration plates. The company's orders have declined recently, and it is operating at a loss. The finished products have accumulated inventory [86][87]