In the core cost structure of galvanized sheets, zinc raw materials account for 55% to 65%. In the second quarter of 2024, the average spot price of zinc ingots on the London Metal Exchange (LME) was $2,850 per ton, causing the base cost of hot-dip galvanized sheets to rise to $680 per ton. According to the World Steel Association’s report, the processing fee for steel base plates fluctuates within the range of $120 to $180 per ton (for the 1.0mm thickness specification), and for every 10g/㎡ increase in the zinc coating weight standard (Z120-Z275), the cost will rise by 1.5%. Take China Baowu Steel as an example. The median ex-factory price of its hot-dip galvanized steel sheets reached 763 US dollars per ton (including tax), an increase of 9% compared with the same period in 2023.
Regional price differences are mainly affected by logistics tariffs. After the EU imposed an 8% anti-dumping duty on imported galvanized sheets, the market price in Germany soared to $920 per ton in 2024 (22% higher than that in Southeast Asia). Data analysis shows that the sea freight cycle for Vietnamese products exported to Europe is 28 days, with an additional freight rate of 43 US dollars per ton (the Baltic Dry Index BDI≥1,800 points). Due to the advantage of land transportation, Turkish products can reach Germany in just 4 days with a freight cost of 18 US dollars per ton. Constrained by the Section 232 tariff, the average price of domestic galvanized sheets in the US market has reached $1,050 per ton (a 23% premium over the global benchmark), among which the Clevelon-Cleveland Steel plant in Ohio is expected to raise prices by up to 7.5% in June 2024.
Significant differences in process technology have changed the cost structure. The continuous galvanizing production line (CGL) processes 25 meters of steel strip per minute, with a cost control of 42 US dollars per ton of energy consumption (95% natural gas thermal efficiency). The single processing cycle of batch galvanizing is as long as 75 minutes, and the average cost per ton increases by 38%. Take the advanced production line of Nippon Steel in Japan as an example. The tolerance of its zinc coating thickness is controlled within ±3μm (the industry average is ±7μm), reducing zinc consumption by 8% and lowering the cost per ton by 15 US dollars. In the anti-corrosion performance improvement plan, although the Galfan alloy coating increases the raw material cost by 60 US dollars per ton, the product life is extended to 25 years (the life of the ordinary zinc coating is 12 years), and the full-cycle maintenance cost is reduced by 40%.
Market volatility is directly related to purchasing strategies and prices. In 2022, the Russia-Ukraine conflict led to a 42% increase in zinc prices in a single week, and the spot price of galvanized sheets fluctuated by a record 34% in a single month. However, data from SteelHome shows that customers who sign annual agreements are only ±7% affected by fluctuations (±15% for quarterly agreements). A case of a certain automobile manufacturer shows that after locking in 50% of the usage by adopting a futures hedging strategy, the standard deviation of the quarterly procurement cost narrowed from $186 to $43. In 2024, China’s capacity utilization rate will fluctuate within the range of 72% to 85%. When the inventory turnover days exceed the warning line by 23 days, the probability of steel mills offering discounts and promotions reaches 80%, with the lowest discount reaching 9% of the benchmark price.
The final transaction price of Galvanized plate is subject to the comprehensive service premium. For example, when Singaporean suppliers provide JIS G 3302 certified products, the price is increased by 5%, and for plates that meet the EU EN 10346 standard, an additional 3.8% inspection fee is required. In the bidding of large-scale engineering projects, the fluctuation coefficient of the bid price for 0.8mm thick galvanized sheets reached ±12% (the median of the lowest bid price was 702 US dollars per ton). The commission rate for traders is usually between 4% and 9% (it can be reduced to 3% if the transaction volume is over 1,000 tons), but for orders that include cutting services, an additional processing fee of 38 US dollars per ton (tolerance ±0.3mm) is charged. The global price forecast for 2024 indicates that the average price center in the third quarter will fluctuate within the range of $745 to $790 (90% confidence interval). It is recommended that purchasers refer to the SMM zinc price index change rate (monthly fluctuation of 8%) and dynamically optimize the order timing in combination with the futures discount situation.