China's New Galvanized Sheet Capacity to Exceed 10 Million mt in 2026-2028! Why Is the Market Still Expanding Rapidly? [SMM analysis]

SMM Dec 11 News:

In recent years, domestic galvanized sheet capacity has experienced a wave of new construction, with steel mills and galvanized sheet plants across various regions launching new galvanizing lines. According to incomplete statistics from SMM, galvanized sheet capacity additions from 2024 to 2028 will exceed 24 million mt, with additions in 2026-2028 alone accounting for 10 million mt. China's galvanized sheet capacity is still expanding rapidly. Why is this happening？

SMM believes the rapid addition of new galvanized sheet capacity is primarily driven by the dual impact of demand expansion and policies.

Policy aspect. Against the backdrop of increasingly stringent environmental protectio policies and overcapacity in the steel industry in recent years, domestic steel enterprises face significant transformation pressure. As coated products offer higher profit margins, some steel mills, while phasing out outdated crude steel capacity, are also extending their production lines downstream to coated products, thereby contributing to a portion of the new galvanized sheet capacity.

Demand aspect.

New Energy Vehicle industry: China's NEV sector has experienced explosive growth in recent years. According to CAAM statistics, NEV sales accounted for 46.7% of total new auto sales from January to October 2025. NEVs are expected to claim half of China's auto market. With the continued expansion of the auto market, the NEV share is projected to increase to around 80% by 2030. The expanding auto market continuously boosts galvanized sheet consumption, leading to substantial new capacity additions.However, it is noteworthy that under the lightweight trend, the amount of steel used in NEVs has shrunk to some extent compared to traditional internal combustion engine vehicles. Some of the reduction in steel sheet has been replaced by lighter aluminum alloy materials, consequently affecting the usage of galvanized steel sheet per vehicle. Therefore, the consumption boost for galvanized sheet from NEVs is expected to gradually slow down as their market share increases.

Home appliance industry: The expansion of the home appliance market has also driven growth in galvanized sheet demand. According to data from the National Bureau of Statistics, production and sales of the three major white goods (washing machines, refrigerators, and air conditioners) all increased by over 8% YoY in 2024. Although the growth rate pulled back from January to October 2025, home appliance production and sales are expected to continue growing from 2026 to 2030, further boosting galvanized sheet consumption.

Export market: The expansion of the export market also brings increased demand for galvanized sheets. According to the latest customs data, galvanized sheet exports reached 1.2994 million mt in October 2025. Cumulative galvanized sheet exports from January to October 2025 totaled 11.7438 million mt, up 10.07% YoY compared to 10.6699 million mt in the same period last year. Driven by infrastructure construction and industrialization processes in some Southeast Asian and African countries, overseas demand for galvanized sheets is expected to continue growing in the future, becoming one of the important growth points for China's galvanized sheet demand.

Driven by both policy and market demand, China's new galvanized sheet capacity has increased significantly in recent years. However, according to SMM calculations, demand growth may not keep pace with the rate of capacity expansion, which could lead to a future decline in the operating rate for galvanized sheets in China. Therefore, although the market is currently still expanding rapidly, potential supply-demand imbalance issues need to be guarded against.

(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.)