Why Is There Better-Than-Expected Demand in the Galvanizing Industry During the Off-Season? [SMM Analysis]

According to SMM, with a series of existing and incremental policies continuing to work together in November, China's manufacturing PMI rose to 50.3%, indicating an accelerated expansion. Similarly, the galvanizing industry also showed strong resilience, with the operating rates of galvanising producers increasing MoM. The specific analysis is as follows:

Most large galvanizing enterprises are pipe manufacturers, and their order volumes are closely related to ferrous metals prices. At the end of September, the government announced a series of favorable policies, leading to a rapid and then stable increase in ferrous metals prices. Coupled with the continuous issuance of special bonds, the number of projects increased, and overall demand improved, resulting in higher operating rates in the ferrous metals sector and a good performance in the operating rates of galvanising producers.

Secondly, with the advent of the Trump 2.0 Era, many overseas customers, concerned about potential tariff increases and higher costs, requested early delivery and shipment of orders. Many enterprises reported that the delivery times for orders were advanced, especially in November, with a slight decline in December.

As the weather gradually cools in the north, many road construction projects are nearing completion, leading to increased demand for guardrails and light poles. According to an SMM field trip in Shandong, many enterprises reported increased profits in November and high enthusiasm for production. Additionally, this winter's temperatures are generally higher than last year's, extending the construction period for projects, and the overall end-use demand has not significantly declined.

According to an SMM survey, many large enterprises remain optimistic about December's demand. Although it may weaken due to weather conditions, it is expected to perform better than in previous years. It is anticipated that the operating rates of galvanising producers will drop back slightly but still perform well overall.