Q3 galvanizing operating rates weak YoY; will Q4 demand see a recovery? [SMM Analysis]

SMM, September 30:

The galvanizing industry remained in the doldrums overall in Q3, with operating rates still at relatively low levels YoY, and demand improvement in the traditional peak season also fell short of expectations. Will demand recover in Q4?

Operating rates across the galvanizing industry were weak overall in Q3, as high temperatures, typhoons and other weather conditions disrupted production and transportation at some enterprises. Meanwhile, end-use consumption was mediocre, galvanized pipe sales were sluggish, and enterprise orders provided insufficient support. Some enterprises saw finished product inventories increase and proactively lowered production schedules. Steel tower orders began to see significant release from September, but follow-through from other infrastructure orders was relatively limited. Export orders were mediocre overall, PV-related demand was also weak, and overall operating rates remained weak YoY.

Entering Q4, power grid-related orders still provide some support, and as some projects enter the actual construction phase, they are expected to drive galvanizing demand. On the infrastructure side, some projects will enter the construction phase in Q4, but property-related demand recovery remains slow, and galvanized pipe demand is improving slowly. Solar panel mounting bracket orders are relatively weak, export orders have yet to show notable growth, and traditional demand-side segments still lack broad-based improvement. Therefore, even if some project orders continue to be released in Q4, overall industry demand may still show only a structural recovery.

On balance, operating rates of galvanising producers in Q4 may rebound from Q3, but the extent of the recovery will still depend on the follow-through of new orders from the power grid, infrastructure and other sectors. If subsequent project orders can be smoothly implemented, industry operating rates are expected to improve further, but the overall pattern of operating rates remaining weak YoY is expected to persist.

(The above information is based on market collection and a comprehensive assessment by the SMM research team. The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions prudently and should not use this as a substitute for their own independent judgment. Any decisions made by clients are not related to SMM.)