SMM, August 18:
With Q3 2026 already halfway through, how have die-casting zinc alloy and zinc oxide consumption performed recently? What are enterprises' expectations for the period ahead?
Die-casting zinc alloy:
According to SMM data, the die-casting zinc alloy operating rate was 38.18% in July (down 2.28 percentage points MoM, down 5.22 percentage points YoY). Meanwhile, after entering August, weekly operating rates at die-casting zinc alloy enterprises have been fluctuating around 40-50%. The market is still in the traditional consumption off-season, and overall demand across end-use sectors has been mediocre.
Looking at end-use orders, demand in real estate hardware, automotive hardware, luggage zipper hardware, and medals and ornaments has been weak. Although some enterprises reported relatively stable orders, overall end-use consumption has been relatively mediocre and industry demand remains sluggish.
SMM previously expected the die-casting zinc alloy industry operating rate to be basically flat compared with July, with the new sample operating rate estimated at 38.22%. However, in early August, alloy plants in East China were still affected by extreme weather, with some shutdowns and production suspensions. Meanwhile, downstream consumption support was limited amid high and volatile zinc prices. Small and medium-sized downstream end-users remained cautious about future orders, and near-term demand improvement lacked sufficient support. Based on actual market performance and enterprise expectations, the die-casting zinc alloy industry operating rate is expected to continue its weak trend overall. The August operating rate faces downside risks, and enterprises hold a similarly cautious attitude toward long-term consumption expectations.
Zinc oxide:
According to SMM data, the zinc oxide operating rate was 44.94% in July (down 3.78 percentage points MoM, down 1.88 percentage points YoY). After entering August, weekly zinc oxide operating rates recovered somewhat, driven by production resumptions at some enterprises. SMM expects August operating rates at zinc oxide enterprises to edge up to around 45.07% (up 0.13 percentage points MoM), but on a YoY basis they will still remain weak.
August is a build-up phase before the traditional consumption peak season, but judging from current consumption performance, end-use demand has not shown a clear improvement. By segment, according to data from the China Passenger Car Association, nationwide retail sales of passenger cars totaled 317,000 units during August 1-9 (down 22% YoY, down 3% MoM), marking a weak start. Meanwhile, in the first half of August, some tyre factories were still shut down, which weighed on rubber-grade zinc oxide consumption; end-use demand for ceramic-grade zinc oxide was affected by the real estate market, leaving insufficient end-use support; feed-grade zinc oxide consumption remains sluggish for now, but with the upcoming Mid-Autumn Festival and National Day holidays, demand is expected to improve somewhat; electronic-grade zinc oxide has been broadly stable, and as the September-October peak season approaches, there will still be some development opportunities ahead, while some market enterprises are relatively bullish on demand in this segment.
Overall, current high zinc prices still exert some pressure on end-use consumption of die-casting zinc alloy and zinc oxide, and the market has yet to show clear signs of consumption recovery in August.As previously suspended enterprises gradually resume production and the traditional peak consumption season approaches, the zinc oxide operating rate is expected to still have some room for a slight rebound in the short term, but will remain in negative YoY growth; die-casting zinc alloy, however, is more significantly disrupted by high zinc prices, and with extreme weather in east China still causing some disruption, its operating rate upside room is expected to be relatively limited.
(The above information is based on market data collection and a comprehensive assessment by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and should not use this as a substitute for their own independent judgment. Any decisions made by clients are not related to SMM.)
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