Galvanizing's Q1 start was slightly weaker than the same period last year. How will the market perform in the future? [SMM Analysis]

SMM March 26 News: As Q1 2025 is about to end, during the Chinese New Year holiday, galvanizing enterprises gradually entered the holiday maintenance rhythm from early January. Due to the cold weather, most construction projects also gradually entered the holiday rhythm, and demand began to pull back. After the holiday, large factories resumed operations first, while small factories resumed operations around the Lantern Festival. The resumption of project construction was slow, and demand gradually climbed. Infrastructure investment in February increased slightly YoY. Most enterprises were handling pre-holiday orders, and the operating rate of galvanizing slowly rose. Compared with the same period, the operating rate was relatively weak, and there was no significant "Golden March" peak season phenomenon in March. Will demand improve in Q2?

By sector: Galvanized pipes were significantly affected by ferrous metals prices. After the holiday, ferrous metals prices fluctuated downward. However, as traders were concerned about the impact of tariffs on ferrous metals after the holiday, they did not stock up heavily before the holiday. Although ferrous metals prices slightly declined after the holiday, traders replenished their stocks in a timely manner. Overall, the sales of galvanized pipes were moderate. Although the real estate sector remained sluggish, terminal projects basically started in March, and infrastructure showed slight growth. Actual demand also improved. According to SMM, galvanized pipe factories also believe that overall demand will be delayed, and the consumption expectation for April is moderate. Large factories have high production schedules, and the expectation for Q2 is better than Q1. Macro-wise, the issuance of local government bonds progressed quickly, and the "2024 China Fiscal Policy Implementation Report" released by the Ministry of Finance on March 24 clearly mentioned actively expanding effective investment, coordinating the use of various government investment funds, focusing on key areas and weak links to increase investment, and reasonably arranging the issuance of government bonds to accelerate the budget allocation of government bond funds and form physical workload as early as possible. There is still a good expectation for the subsequent project implementation.

In the galvanized structure sector, data from the National Energy Administration showed that from January to February, the national power grid engineering completed an investment of 43.6 billion yuan, up 33.5% YoY, continuing the high growth of power grid investment. The State Grid Corporation of China announced that power grid investment in 2025 will exceed 650 billion yuan for the first time, focusing on optimizing the main grid, strengthening the distribution grid, and serving the high-quality development of new energy, continuing to promote the implementation of major projects. China Southern Power Grid arranged fixed asset investment of 17.5 million yuan in 2025, setting a new historical high. According to SMM, new tenders have been launched after the holiday, and some enterprises have received new orders for UHV projects. Subsequent tenders will be launched one after another, and power steel towers will still be a highlight of galvanized orders in 2025.

In the same power sector, solar panel mounting brackets have entered a stable development period. According to SMM's prediction, the proportion of distributed brackets will gradually increase, while the proportion of galvanized brackets in solar panel mounting brackets will decrease. However, centralized PV construction is expected to gradually recover from April, and orders are expected to increase in Q2.

In terms of exports, after Trump took office in 2025, tariff disputes continued. However, galvanized pipes and structural parts are mainly exported to Southeast Asia, Australia, the Middle East, and Europe, with fewer exports to the US. Galvanized export orders have not been affected by tariff increases for the time being, and overall export orders remain relatively stable. However, a new round of tariffs will start on April 2, and enterprises are still concerned about the impact on subsequent export orders.

Overall, there is still an optimistic attitude towards the overall demand situation in Q2, and the operating rate of galvanizing enterprises is expected to increase slightly.

(The above information is based on market collection and comprehensive evaluation by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Customers should make decisions cautiously and not use this to replace independent judgment. Any decisions made by customers are not related to SMM.) Click to view the SMM metal industry chain database.