Why did the import volume of die-casting zinc alloy surge in October? [SMM Analysis]

SMM, November 25: According to customs data, the import volume of die-casting zinc alloy in China surged in October, increasing from 4,047.44 mt in September to 6,065.26 mt in October, up 49.86% MoM. As of October, the cumulative import volume reached 40,764.37 mt, recording a YoY decrease of 3.28%.
From the perspective of import provinces, Guangdong Province remained the top importer in October, followed by Zhejiang Province, similar to September. In terms of import sources, South Korea ranked first in October, accounting for 30%, followed by Australia, Japan, Vietnam, and Thailand. The increase in import volume in October compared to the previous month was mainly from South Korea, Australia, Vietnam, and Japan.

So, what were the reasons for the increased imports in October?

First, from a price perspective, domestic zinc prices in China fluctuated at high levels in October, surpassing 26,000 yuan/mt, prompting many enterprises to purchase cheaper zinc alloys from Southeast and East Asian countries close to China to cope with high zinc prices. It is reported that enterprises usually choose to buy some scrap, such as zinc alloy scrap from engines, and import it into China in the form of zinc alloy.

Second, in terms of exchange rates, although the RMB exchange rate showed a downward trend in October, it still fluctuated at high levels overall. Therefore, some enterprises chose to import foreign zinc alloys to reduce production costs.

Third, according to SMM, although the quality of zinc ingots or zinc alloys from Australia and South Korea is relatively better than domestic zinc ingots and alloys, the price of local scrap is also lower than domestic prices. In this case, die-casting zinc alloy enterprises also chose to import a large amount of such scrap made into alloy forms. Additionally, the coastal areas, densely populated with foreign trade enterprises, have a high demand for imported alloys.

In summary, the import volume of die-casting zinc alloy surged in October due to the above reasons. However, based on the RMB exchange rate and domestic downstream consumption trends in November, it is expected that the import volume of die-casting zinc alloy in China will remain relatively stable in November. SMM will continue to monitor import and export data closely.