The first half of the year has passed. How will galvanized sheet perform in the second half?[SMM Analysis]

SMM June 27 News:

In the first half of the year, domestic cold-rolled prices continued to decline, driving down the prices of finished galvanized sheet products. The downstream "rush to buy amid continuous price rise and hold back amid price downturn" mentality persisted, and domestic trade orders remained lukewarm. The "rush to export" wave gradually dissipated. How did galvanized sheet perform in the first half of the year? And how will it perform in the second half？

Domestic Trade Sector

• Real estate Sector: According to data from the National Bureau of Statistics (NBS), from January to May, the cumulative year-on-year decrease in newly started construction area of real estate was 22.8%. Although the decline narrowed somewhat, it remained in negative growth, continuously dragging down the performance of related zinc demand. Before the Chinese New Year, as workers gradually took holidays, orders for domestic galvanized sheet mills continued to weaken. Although there was a seasonal recovery in orders for construction plates in March and April after the holiday, with the rise in domestic temperatures and the arrival of the rainy season in south China in June, orders for domestic construction plates worsened again. Entering the second half of the year, Q3 coincides with high-temperature weather in China, and outdoor construction projects are expected to weaken MoM. Related orders are expected to perform poorly. Although domestic trade orders may improve MoM in September and October, orders for construction plates are expected to worsen again at the end of Q4 as temperatures drop.

• Home Appliance Sector: According to NBS data, from January to May, the cumulative year-on-year increase in washing machine production was 9.3%, the cumulative year-on-year decrease in refrigerator production was 1.5%, and the cumulative year-on-year increase in air conditioner production was 5.9%. Overall, the production and sales performance of the three major white goods in China was good in the first half of the year. According to SMM, domestic consumption subsidy policies continued to promote the consumption of low and mid-end home appliances, which also drove orders for related home appliance plates. Additionally, home appliance manufacturers stocked up on raw materials in advance for summer sales promotions, resulting in good order performance for domestic home appliance plates in March and April. However, as stock-up orders were gradually digested, the current order performance for home appliance plates is mediocre. In July, the third batch of trade-in funds for consumer goods in China this year was disbursed. It is expected that related policies will support domestic home appliance production and sales, and end-use demand will continue to drive domestic home appliance plate orders in the second half of the year.

• Auto Sector: According to data from the China Association of Automobile Manufacturers (CAAM), from January to May this year, auto production and sales reached 12.826 million units and 12.748 million units respectively, up 12.7% and 10.9% YoY. Among them, NEV production and sales reached 5.699 million units and 5.608 million units respectively, up 45.2% and 44% YoY. NEV new car sales accounted for 44% of total new car sales. Driven by NEV production and sales, orders for automotive galvanized sheet increased YoY in the first half of the year, and related orders performed well. It is expected that orders for automotive galvanized sheet will continue to operate steadily in the second half of the year.

Export Sector.

According to data from the General Administration of Customs, from January to May, the cumulative export of galvanized sheet increased by 11.64% YoY, indicating a continued strong performance in domestic galvanized sheet exports. Due to the resurgence of tariff disputes between China and the US, some overseas countries placed export orders for galvanized sheet in advance to avoid subsequent tariff barriers. Coupled with the strict crackdown on fraudulent export declarations in China starting from April, domestic galvanized sheet manufacturers rushed to meet deadlines for export orders, leading to a significant increase in domestic galvanized sheet export orders in March and April. In May, the tariff rates between China and the US declined significantly, but domestic galvanized sheet manufacturers reported poor performance in new export orders, and the "export rush" orders from the previous period were gradually being digested, resulting in a weakening of galvanized sheet exports. Entering H2, as overseas markets gradually enter the off-season, coupled with a certain degree of consumption anticipation from the previous "export rush", it is expected that galvanized sheet exports will continue to decline in Q3. However, demand for galvanized sheet in Southeast Asian countries remains robust, and the overall export performance of galvanized sheet is expected to maintain positive YoY growth in H2.

(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 and decision-making. Customers should make cautious decisions and should not replace their independent judgment with this information. Any decisions made by customers are not related to SMM.)