Chinese galvanizer utilization rates have risen to 78% in early June, the highest level since Q4 2025. The increase is driven by infrastructure spending acceleration, with the central government approving $120 billion in new transport and energy projects in late May.
The Ministry of Finance has directed local governments to front-load infrastructure bond issuance, with 50% of the annual quota allocated in the first half of 2026 — up from 38% in the same period last year. This front-loading is pulling galvanized steel demand forward.
Galvanized steel production for May was estimated at 5.8 million tonnes, up 6% year-on-year. Inventory days of finished galvanized products fell to 12 days from 15 days in April, indicating strong absorption.
The demand strength is partially offsetting the impact of high raw material costs. Galvanizers report margins compressed to 2-3% but remain in positive territory, avoiding the widespread curtailment seen in previous cost-push cycles.
The infrastructure-driven demand surge is real and near-term. Buyers should expect tight availability through August. For spot purchases, accept premiums of $80-100/t over SHFE. Structure Q3 contracts with a fixed zinc differential rather than floating, as the utilization trend supports sustained demand.