[SMM Analysis] Galvanized-Cold Rolled Spread Likely to Consolidate at Lows for Full Year 2026

• Galvanized-Cold Rolled Spread Consolidated at Lows in 2026, Significantly Below Previous Years' Levels

Since early 2026, the galvanized-cold rolled spread has been moving extremely sideways in the 220-300 yuan/mt range, with an average of 273 yuan/mt, significantly below the 414 yuan/mt average in the same period of 2025.

SMM Galvanized-Cold Rolled Spread Chart

Source: SMM
Looking back at historical data, from 2023 to 2025, the galvanized-cold rolled spread showed clear seasonal characteristics, with the spread quickly shooting up in Q2 as downstream demand recovered, reaching a yearly high in mid-year before gradually pulling back. However, in 2026, the spread broke its historical pattern, consolidating at narrow low levels throughout the year, without the significant expansion seen in Q2 of previous years.
In H1 2026, the galvanized-cold rolled spread mostly consolidated in the 220-300 yuan/mt range, with minor fluctuations in January-March, and after hitting a yearly low in May, it slowly edged up, with a peak only approaching 300 yuan/mt, significantly below the 500-800 yuan/mt peak levels in the same period of previous years.
The prolonged suppression of the galvanized-cold rolled spread is fundamentally due to constraints from both supply and demand. On the supply side, the concentrated release of new production lines for China domestic galvanizing and zinc-aluminum-magnesium products has intensified competition, significantly compressing the upside room for galvanizing processing fees. On the demand side, real estate-related galvanizing consumption remained relatively weak; although automotive and home appliance demand showed resilience, the overall incremental demand for galvanized sheet was limited, and exports of galvanized sheet were unable to fully absorb the new capacity, significantly weakening the boost effect from peak seasons. Meanwhile, on the cost side, ample supply of cold-rolled substrate and its low price level, along with difficulties for zinc price fluctuations to fully support galvanized sheet costs, further curbed the upward movement room for the galvanized-cold rolled spread.

•  In H2 2026, the galvanized-cold rolled spread is expected to continue moving sideways in the current range or narrow upward fluctuations

Looking ahead to H2 2026, the probability of a significant rise in the spread is low; under a neutral scenario, it may continue moving sideways in the 260-340 yuan/mt range. If manufacturing orders show marginal improvement during the September-October peak season, the spread may have a slight upward opportunity, but due to capacity constraints, the upside room is limited. If peak season demand falls short of expectations, the spread faces downward pressure to 220-250 yuan/mt. Further sharp contraction in the spread would lead to larger losses for steel mills, forcing some galvanizing production lines to undergo maintenance or cut production, providing bottom support for the spread. Overall, against the backdrop of overcapacity and weak demand, the galvanized-cold rolled spread is unlikely to return to previous high levels, and is more likely to fluctuate in a range following marginal changes in demand.