SMM, June 26:
In Q2 2026, the traditional peak season for the galvanizing industry fell short of expectations, weighed by sluggish real estate recovery and delayed implementation of local government bonds. Overall operating rates weakened YoY, with only infrastructure and export-related categories showing structural opportunities. In Q3, the industry is expected to continue this YoY weakness, with clearly differentiated market phases: the July-August off-season will see persistent consolidation at lows, while a turning point in end-use demand is expected at end-August, and the September peak season may bring a sustained recovery in operating rates.
Q2 is the traditional peak season for galvanizing. Supported by the 15th Five-Year power grid and pipeline network investment plan, as well as State Grid and UHV tenders, the market initially expected a demand recovery. However, actual market conditions were weak: industry operating rates recovered slightly MoM but continued to decline YoY, and the peak season failed to materialize. The main drags were real estate and infrastructure funding. Real estate showed persistent weak stabilization, with new starts lacking momentum; only the "ensure timely delivery of housing projects" policy supported some just-in-time demand, leaving construction-related galvanizing demand overall sluggish. Downstream end-users mainly made just-in-time procurement,with no concentrated restocking. On the infrastructure side, policy support was ample, but delays in local government bond issuance and fund allocation led to slow project implementation and construction progress, making it difficult for policy benefits to reach end-users and offset the demand gap from real estate. The market showed structural divergence: only steel towers, PV mounting brackets, and export guardrails demonstrated strong order resilience, while mainstream demand for civil-use pipes and construction galvanized sheets was mediocre. Overall, Q2 operating rates were weak YoY, and the peak season market turned out to be a disappointment.
Q3 is expected to see early consolidation at lows followed by a recovery trend. Although overall operating rates will remain weak on a YoY basis, a consumption inflection point will appear at end-August, and a marked recovery in operating rates is expected in the September peak season.
High summer temperatures will suppress outdoor construction, pushing real estate and infrastructure end-use demand into an off-season. Coupled with slow infrastructure fund disbursement, project additions will be limited, and industry overall operating rates will continue their YoY weakening trend, with enterprises maintaining low-load production. At end-August, the market will gradually begin to stockpile in advance for the September peak season, and end-user transactions will recover. Meanwhile, previously delayed local government bond funds will be disbursed in a concentrated manner, and pipeline network, UHV, and power grid infrastructure projects are expected to accelerate, leading to a steady improvement in consumption. As September begins, high temperatures will subside and outdoor construction conditions will improve comprehensively, ushering the industry into its traditional demand peak season. The stockpiling demand accumulated since end-August and infrastructure construction demand will materialize intensively, driving a significant MoM rebound in operating rates. In Q3 overall, operating rates will remain weak on a YoY basis, but the recovery trend from late August to September is clear, and the YoY decline will steadily narrow.
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