SMM February 19 News:

China's die-casting zinc alloy enterprises are largely concentrated in the South China (Guangdong) region, where end-user enterprises are mainly real estate hardware companies. In east China, alloy factories primarily serve end-user enterprises producing automotive parts and various small hardware products, while in north China, end-user enterprises cater to a wider range of downstream sectors, including construction materials and small hardware.

From the perspective of regional operating rates, the January operating rates for die-casting zinc alloy in north China, east China, and south China were expected to record 34%, 30.16%, and 33.76%, respectively. The actual January operating rates were 40%, 30.09%, and 37.09%, with north and south China exceeding expectations, while east China was basically flat with expectations. What were the actual reasons behind this?        

In north and south China, the high-tech sector, NEV parts sector, and some export orders showed improvement in January. The overall increase in operating rates for enterprises in these two regions in January can be attributed to the following factors.

1. According to enterprise feedback, as the Chinese New Year break occurred at the end of January, many enterprises scheduled their holidays around January 15–20. However, zinc prices showed an overall downward trend in January, enabling many end-user enterprises to fulfill orders that had previously been delayed due to high zinc prices. Additionally, some enterprises took the opportunity to restock at lower prices, which extended the holiday schedules of die-casting zinc alloy enterprises and drove up operating rates.

2. In terms of specific order performance, orders in the real estate small hardware sector were generally ordinary due to the off-season and a sluggish property market, except for a few enterprises with stocking demand. The NEV parts sector performed well overall, while stocking demand for small hardware products such as luggage zippers also increased slightly due to the pullback in zinc prices. Meanwhile, some enterprises reported a significant increase in export orders from large companies such as Huawei and ZTE. Furthermore, in high-tech sectors like electronic components, orders also showed remarkable performance.

In summary, the lower zinc prices before the Chinese New Year led to an increase in end-user orders and stocking demand for some enterprises, driving regional operating rates beyond expectations. As subsequent consumption gradually recovers, operating rates in various regions are expected to continue rising.

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