Expansion tide of galvanized coil production capacity: industry dilemma under supply-demand imbalance

As the development of multiple varieties in the steel industry has reached a bottleneck, many steel mills have shifted their focus to cold-rolled products in recent years, continuously adding production lines across the country. The new capacity of galvanized coil exceeded 6 million tons in 2025, and will continue to grow in 2026-2027. However, this has led to an oversupply of galvanized coil, with demand failing to grow at the same pace, resulting in an imbalance between supply and demand. Internal competition among steel mills is severe, and price wars occur frequently.

In terms of production capacity, with the continuous expansion of galvanized coil production capacity in recent years, the total national production capacity has exceeded 120 million tons, and there is a trend of continued growth. In 2025, except for the southwest and northeast regions, which saw no new capacity additions, the increment in other regions ranged from 500,000 to 2.5 million tons, with a total of about 6.6 million tons of new capacity. From 2026 to 2027, new capacity additions will mainly be concentrated in the northeast, north, east, and southwest regions, totaling about 8 million tons. By then, the total national production capacity will exceed 130 million tons. Over the past three years, production has been continuously rising. The weekly production average for the sample week in 2024 was 950,000 tons, rising to 994,000 tons in 2025. As of the time of writing in 2026, the average has reached a new high of 1.021 million tons.

From the perspective of demand, there has been no "good start" market after the Spring Festival in the past three years, and downstream demand has shown a trend of contraction. The average daily transaction volume for the sample in 2024 was 16,200 tons, and in 2025 it was 15,800 tons, a decline of about 2.5%. As of the time of writing, the average daily transaction volume for 2026 is 14,000 tons, which is at a low level in the past three years.

In terms of inventory, due to the long-term high production in 2025 and the expansion of production capacity, the high supply coupled with shrinking demand led to a continuous increase in inventory in the second half of the year, reaching a peak of 1.34 million tons in November, setting a high starting point for 2026. The highest inventory value after the new year was 1.3797 million tons, reaching the highest level in the past three years. To break the deadlock in the industry, it is necessary to start from the source to control output, reject internal competition, eliminate backward production capacity, and increase production capacity of mid-to-high-end products.