Cold-rolled prices continued to decline in Q3, affecting galvanized sheet prices as well. The market's inherent "rush to purchase amid continuous price rise and hold back amid price downturn" sentiment, combined with the seasonal off-season in Q3, led to a MoM decrease in end-use demand. The operating rate of galvanized sheet producers continued to decline in July and August, but rebounded to around 80% in September as end-use consumption recovered. From the perspectives of domestic trade and exports, how did the domestic galvanized sheet perform in Q3, and what are the expectations for Q4?
Domestic trade:
Construction sector: Q3 is the traditional seasonal off-season in China, with high temperatures, heavy rains, and typhoons all unfavorable for outdoor construction projects. End-use demand for galvanized sheets weakened. According to NBS data, the cumulative growth rate of real estate completions in Q3 continued to decline to -24.4%, which also reflects market performance.
Home appliance sector: In July and August, high summer temperatures led to poor operating rates of home appliance factories. Among the three major white goods, air conditioner production and sales declined significantly. Combined with the continuous decline in ferrous metals prices, some home appliance galvanized sheet manufacturers reduced or halted production due to losses. Subsequently, stimulus policies such as home appliance replacement subsidies in various regions gradually took effect, and the demand for inventory stocking for the "Double 11" shopping festival was released. The operating rates of home appliance manufacturers increased, and in September, the production and sales of the three major white goods recovered significantly, driving the operating rates of home appliance galvanized sheet enterprises to rise as well.
Automotive sector: According to CAAM data, from January to September this year, automobile production and sales reached 21.47 million units and 21.57 million units, respectively, with cumulative YoY growth of 1.90% and 2.40%. Although automobile production and sales slightly increased compared to last year, the proportion of NEVs rose from 31% last year to about 38% this year. However, the cumulative YoY production of traditional fuel vehicles declined by 10% from January to September, and in Q3, the production and sales of traditional fuel vehicles also decreased MoM, negatively impacting orders for automotive galvanized sheets.
Entering Q4, ferrous metals prices surged rapidly before the National Day holiday, driving up raw material prices and boosting some galvanized sheet orders. Processing fees for some galvanized sheet manufacturers in the Boxing area increased, leading to a short-term rise in operating rates. However, the performance of ferrous metals prices lacked momentum, and market sentiment turned cautious again. As the weather gradually cools, outdoor construction in north China will be disrupted once more. Given the continued downturn in the real estate market this year, the performance of galvanized sheet in domestic trade in Q4 is expected to be limited.
In terms of exports, galvanized sheet demand in Southeast Asia remained strong this year, and the price advantage led to good export performance. From January to September, galvanized sheet exports increased by 15% YoY. However, several countries, including Colombia, Ukraine, and Brazil, launched anti-dumping investigations on Chinese galvanized sheets this year. While short-term galvanized sheet exports remain strong, there is a need to be cautious about the potential decline in demand from countries with anti-dumping measures in the long term.
