SMM March 28 News:
As Q1 is about to end, domestic cold-rolled prices have continued the level from Q4 last year, fluctuating rangebound overall, with market sentiment for galvanized sheet procurement remaining relatively cold. January-February coincided with the Chinese New Year holiday, and due to corporate holidays, domestic galvanized sheet production dropped to a low at the end of the year. After the Lantern Festival, galvanized sheet factories gradually resumed production, and domestic galvanized sheet enterprises saw a significant rebound in production MoM in March. From the perspective of end-use consumption, how did domestic galvanized sheet factories perform in Q1? What are the expectations for Q2？
Construction sector. In Q1, orders for construction galvanized sheets first declined and then increased. In January, due to colder weather and the approaching Chinese New Year, demand for outdoor construction projects dropped significantly, and order volumes hit a yearly low. After the Lantern Festival, the resumption of work drove the gradual recovery of outdoor projects and orders. Although galvanized sheet factories returned to pre-holiday production levels in March, raw material prices remained low, with new construction area down 29.6% YoY in January-February and real estate completion area down 15.6% YoY. The real estate market performed poorly, and related galvanized sheet orders were relatively mediocre. Looking ahead to Q2, the galvanized sheet market has seen cut-throat competition in recent years, with most market players having thin order books. Amid the continued downturn in the real estate market, many are adopting a wait-and-see attitude toward the future. Coupled with the annual rainy season in June, orders for related construction sheets are expected to gradually weaken in Q2.
Automotive sector. According to CAAM data, China's auto production increased 16.2% YoY cumulatively in January-February 2025, while auto sales rose 13.1% YoY cumulatively. The automotive sector performed better in Q1 than in the same period last year and also showed a significant recovery compared to Q4. Most enterprises producing automotive sheets are state-owned enterprises, and overall order performance has been relatively stable. The seasonal recovery in auto production and sales has driven related automotive sheet orders, but as the proportion of new energy vehicles continues to rise, the overall zinc consumption for automotive sheets may grow limitedly or even see a slight decline. Orders for related automotive sheets are expected to remain largely unchanged in Q2.
Home appliance sector. According to data from the National Bureau of Statistics, China's auto production increased 12.7% YoY cumulatively in January-February 2025, while refrigerator production rose 11.8% YoY cumulatively and air conditioner production increased 9% YoY cumulatively. Home appliance production and sales data remained robust in Q1, driving the continuous recovery of related galvanized sheet orders since the beginning of the year. According to SMM, subsidy policies such as "trade-in" have continued to boost orders for low and mid-end home appliance galvanized sheets in the market. Related order volumes for domestic galvanized sheet factories were moderate in Q1, but low finished product prices led to poor profitability for some orders, prompting some companies to reduce production of loss-making orders, resulting in slightly mediocre production levels. Related order demand is expected to remain steady at the beginning of Q2, but as home appliance production and sales enter the off-season in May and June, orders may weaken MoM.
Export sector. According to data from the General Administration of Customs, cumulative galvanized sheet exports reached 2.0973 million mt in January-February 2025, up 18.92% YoY cumulatively. From the data, galvanized sheet exports remained strong at the beginning of 2025, with overall growth rates maintaining last year's levels. In March, as domestic galvanized sheet factories resumed production and demand in Southeast Asia remained firm, related galvanized sheet exports are expected to continue growing. However, as domestic galvanized sheet demand gradually enters the off-season in Q2, related export data may pull back.
In summary, domestic galvanized sheet production continued to recover MoM in Q1, but the sluggish real estate market continued to drag down related galvanized sheet orders. Home appliance consumption is also expected to seasonally weaken in Q2, and some companies are concerned about future exports due to tariff disturbances. Galvanized sheet production is expected to decline in Q2.
