SunSirs: With Both Supply and Demand Weak, Prices Were Under Pressure, and Galvanized Sheets and Coils Were Operating at a Weak and Stable Level

Price trend

In October, galvanized sheet prices exhibited a fluctuating pattern of "stability followed by weakness," primarily influenced by the interplay between weaker-than-expected demand and cost support. At the beginning of the month, buoyed by the lingering effects of favorable policies implemented during the Mid-Autumn Festival and National Day holidays, average market prices briefly remained firm. However, as expectations for a strong October fell short, prices gradually came under downward pressure. According to the SunSirs commodity market analysis system, as of October 31st, the average price of galvanized sheets and coils in the domestic market was 4,195.00 RMB/ton, unchanged from before the holidays.

Factors affecting price fluctuations:

Expansion of supply side production capacity 

According to statistics at the end of 2024, the total production capacity of sample galvanized sheets and coils enterprises was 119 million tons. New capacity was continuously coming online since the first half of this year. As of October, the estimated new capacity for 2025 was 5.62 million tons, with 3.62 million tons already put into operation in the first half of the year. Looking at the enterprises adding new capacity, they were all mainly private enterprises, while state-owned steel mills were mainly upgrading their equipment to increase capacity.

In addition to the new capacity coming online this year, even underutilized production will increase domestic supply pressure. On the other hand, the capacity utilization rate of galvanized sheet and coil continued to rise, and there had been no significant reduction in supply. According to the latest data from SunSirs, the overall operating rate of galvanized sheet this cycle was 80.95%; the capacity utilization rate was 63.98%, up 0.37%; and the weekly output was 912,600 tons, up 5,400 tons from the previous week.

High level accumulation of inventory, the pressure of destocking was highlighted

Since the beginning of August this year, inventories had been steadily increasing, and there were  no signs of a reduction. Inventories had already reached 1.57 million tons, a high level in the past three years. The rate of increase accelerated after September, with an increase of 200,000 tons in less than two months.

High inventory levels led to significant pressure to reduce inventory. Looking at the different phases, the inventory pressure was particularly evident in the middle of the month: In mid-October, the steel inventory of key steel enterprises reached 16.58 million tons, an increase of 4.4% month-on-month and 7.5% year-on-year; as of October 24, the total inventory of galvanized sheets and coils was still as high as 1.8487 million tons, only a slight decrease of 15,200 tons from the beginning of the month, and the destocking speed was significantly slower than in the same period of previous years.

Looking at inventory data from the three major regions, apart from the significant increase in inventory in Lecong market, the increases in Shanghai and Tianjin were relatively slow. However, overall inventory was still on the rise, a stark contrast to the inventory reduction seen in the fourth quarter of previous years. As of October 31, the inventory of galvanized sheets and coils in the South China market was around 490,000 tons, about 150,000 tons higher than the same period last year, with private resources from the north accounting for a high proportion, exceeding 70%.

Real estate-related demand continued to decline

According to data from the National Bureau of Statistics, from January to September 2025, the cumulative year-on-year decrease in new construction area of real estate decreased by 18.9%, and the cumulative year-on-year decrease in completed real estate area decreased by 15.3%. Demand related to real estate continued to decline this year. While domestic galvanized sheet orders rebounded in September and October due to gradually cooling temperatures, the recovery was limited. Regarding appliance steel sheets, the approaching Double Eleven shopping festival led to renewed demand for appliance stockpiling in September and October, resulting in some appliance steel sheet orders. According to data from the China Association of Automobile Manufacturers, from January to September 2025, China's automobile production and sales both increased by more than 10% year-on-year, leading to continued growth in demand for automotive galvanized sheet.

The arrival of winter in northern China in November will further suppress demand for infrastructure and real estate, and the construction site start rate may continue to decline; although the home appliance and automobile industries remain resilient, they are unable to offset the decline in demand during the traditional off-season.

Enterprises, represented by leading state-owned steel mills, still primarily focused on taking orders for automotive steel sheets, minimizing their supply to the market circulation end. Private steel mills, lacking end-user markets, were facing a price competition dilemma due to the influx of large quantities of resources into the market.

Exports may decline in October

According to the latest customs data, in terms of galvanized sheets, the export volume of galvanized sheets in September 2025 was 1.2262 million tons, an increase of 11.7% month-on-month. The cumulative export volume of galvanized sheets from January to September 2025 was 10.44 million tons, an increase of 9.87% year-on-year.

The State Taxation Administration's Announcement No. 17, "Announcement on Optimizing Relevant Matters Concerning the Declaration of Prepayment of Corporate Income Tax," officially came into effect on October 1. This policy will precisely target the practice of exporting goods on behalf of others, leading some galvanized sheet manufacturers to actively rush to complete production, load ships, and ship goods before August and September, resulting in an increase in galvanized sheet shipments. However, in October, some overseas end customers were waiting for the specific implementation of the policy, and the overall market sentiment was cautious. Some companies had reported a decrease in export orders, and the export volume of galvanized sheets may decline compared to September.

Market outlook

In summary, private steel mills were not keen to reduce production due to remaining profit margins, making a significant contraction in supply unlikely. As the weather turns colder, orders for galvanized sheets may decline. Meanwhile, high inventory levels coupled with difficulties in reducing inventory kept traders' risk aversion at bay, potentially intensifying competition for volume through price cuts. SunSirs predicts that the galvanized sheet market in November will likely maintain a pattern of weak supply and demand, with prices under pressure, and may experience narrow fluctuations in the short term.

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