Galvanizing started slightly weaker in Q1 compared to the same period last year. How will the demand perform in the future?[SMM Analysis ]

SMM, March 26:As Q1 of 2025 is about to end, during the Chinese New Year holiday, galvanizing enterprises gradually entered the holiday maintenance rhythm from early January. At the same time, 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 progress of project construction resumption was slow, and demand slowly climbed. In February, infrastructure investment increased slightly YoY, with most enterprises fulfilling pre-holiday orders. The operating rate of galvanizing producers slowly rose, but compared to the same period, the operating rate was relatively weak. By March, there was no significant "Golden March" peak season as in previous years. Will demand improve in Q2?

By Sector:

Galvanized pipes are significantly influenced by ferrous metals prices. After the Spring Festival, ferrous metals prices fluctuated downward. However, as traders were concerned about the potential weakening of ferrous metals prices due to tariffs after the holiday, they did not stock up heavily before the festival. Although ferrous metals prices slightly declined after the holiday, traders replenished their stocks in a timely manner, resulting in moderate sales of galvanized pipes overall. While the real estate sector remains sluggish, most terminal projects have commenced operations by March, and infrastructure has shown slight growth, leading to an improvement in actual demand. According to SMM, galvanized pipe factories also anticipate a delay in overall demand, with moderate expectations for pipe consumption in April. Large factories have high production schedules, and expectations for Q2 are better than for Q1. From a macro perspective, the issuance of local government bonds has progressed rapidly. The "2024 China Fiscal Policy Implementation Report" released by the Ministry of Finance on March 24 explicitly 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 workloads as early as possible. There remains a positive outlook for the subsequent implementation of projects.

In the galvanizing structure, data from the National Energy Administration shows that from January to February, the national power grid projects completed an investment of 43.6 billion yuan, up 33.5% YoY, indicating continued high growth in power grid investment. The State Grid Corporation of China announced that its 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, while continuing to advance major projects. Meanwhile, China Southern Power Grid has arranged fixed asset investments of 17.5 million yuan in 2025, setting a new historical high. According to SMM, new tenders have already started after the Spring Festival, with some enterprises receiving new orders for ultra-high voltage projects. Subsequent tenders will gradually open, and power steel towers remain a major highlight for galvanizing orders in 2025.
In the power sector, solar panel mounting brackets have entered a stable development phase. SMM predicts that the proportion of distributed mounting brackets will gradually increase, while the proportion of galvanized mounting brackets in PV mounting brackets will decrease. However, centralized PV construction is expected to gradually recover starting in April, with orders expected to grow in Q2.
On the export front, after Trump took office in 2025, tariff disputes have been ongoing. However, galvanized pipes and structural components are mainly exported to Southeast Asia, Australia, the Middle East, and Europe, with fewer exports to the US. Galvanizing export orders have not been significantly affected by tariff increases so far, and overall export orders remain relatively stable. However, a new round of tariffs is set to begin on April 2, and enterprises are still concerned about the potential impact on future export orders.
Overall, there is an optimistic outlook for the overall demand in Q2, with galvanizing enterprises expected to see a slight increase in production.