Galvanizing Operating Rates Reached a Nearly Three-Year High in April How Were the Regional Conditions? [SMM Analysis]

In April, the operating rate in North China continued to rise. Enterprises in North China primarily focus on galvanized pipes, with the operating rate for galvanized pipes also reaching a three-year high. The main reasons were the relatively stable ferrous metals prices in April, which showed a steady increase. Traders exhibited the phenomenon of "rushing to buy amid continuous price rise and holding back amid price downturn." The overall sales volume of galvanized pipes was moderate, and many enterprises continued to operate with a low inventory turnover model, maintaining weekly days of inventories at only around 7-8 days. The order flow was good, leading to an increase in enterprise operations. However, entering May, influenced by macro factors, ferrous metals prices dropped back slightly. Additionally, there was no significant improvement in real estate projects, and enterprises were quite concerned about subsequent demand. Orders for round pipes related to real estate experienced a pullback. Moreover, the price war for galvanized pipes intensified, leading to a significant decline in enterprise profits. As a result, enterprises reduced their production schedules in May.

In April, the operating rate in east China also increased. Enterprises in east China primarily focus on galvanized structural components. There was a gradual release of new orders for steel tower orders, along with continuous new tenders. Steel tower orders remained robust. Guardrail orders were also robust, while export orders declined slightly due to tariff impacts. Entering May, with the mutual reduction of Sino-US tariffs, some enterprises anticipated an improvement in subsequent export orders. However, as May entered the traditional off-season, enterprises were not optimistic about subsequent demand and reduced their production schedules.

In April, the operating rate in South China decreased. Overall demand was weak, and since South China is not a major consumer of galvanized products, the decline in demand was more pronounced, resulting in poor operations.

Looking ahead to May, although the mutual reduction of Sino-US tariffs boosted market confidence, the arrival of the traditional off-season limited the boost to overall demand from export orders. Enterprises were not optimistic about demand in May and generally reduced their production schedules.

[Reprinted with permission - SMM] In April, galvanizing operations reached a three-year high. How did the situation vary by region?