Q1 is expected to end, how will the domestic galvanized sheet orders perform in the future? [SMM Analysis]

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 purchases remaining relatively cold. From January to February, during the Chinese New Year holiday, domestic galvanized sheet production dropped to a year-end low due to company holidays. After the Lantern Festival, galvanized sheet plants gradually resumed production, and domestic galvanized sheet enterprises saw a significant MoM rebound in March in terms of production. From the perspective of end-use consumption, how did domestic galvanized sheet plants 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, with order volumes hitting a yearly low. After the Lantern Festival, the resumption of work drove the gradual recovery of outdoor projects and orders. Although galvanized sheet plants returned to pre-holiday production levels in March, raw material prices remained low. New construction area started from January to February fell 29.6% YoY, and real estate completion area dropped 15.6% YoY, indicating a poor performance in the real estate market, with related galvanized sheet orders remaining 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. Coupled with the annual rainy season in June, related construction sheet orders are expected to gradually weaken in Q2. Automotive Sector: According to CAAM data, China's auto production from January to February 2025 increased 16.2% YoY, while auto sales rose 13.1% YoY. The automotive sector performed better in Q1 compared to the same period last year and also showed a significant recovery from Q4. Most enterprises producing auto sheets are state-owned enterprises, with overall order performance remaining relatively stable. The seasonal recovery in auto production and sales has driven related auto sheet orders, but as the proportion of new energy vehicles continues to rise, the overall zinc consumption for auto sheets may see limited growth or even a slight decline. Related auto sheet orders are expected to remain largely unchanged in Q2. Home Appliance Sector: According to statistics bureau data, China's auto production from January to February 2025 increased 12.7% YoY, refrigerator production rose 11.8% YoY, and air conditioner production grew 9% YoY. 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. Domestic galvanized sheet plants saw moderate order volumes 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. Exports: According to customs data, cumulative galvanized sheet exports from January to February 2025 reached 2.0973 million mt, up 18.92% YoY. 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 plants 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 disruptions. Galvanized sheet production is expected to decline in Q2.