Has Downstream Consumption of Die-Casting Zinc Alloy Boomed in the Traditional September Peak Season? [SMM Analysis]

SMM, September 23: Recently, some companies have reported a slight increase in downstream orders for small hardware, small accessories, and auto parts. But have downstream orders for die-casting zinc alloy companies really improved? When will downstream consumption truly "boom"?
From the operating rate of companies, we can see that the operating rate of die-casting zinc alloy companies has indeed increased YoY in recent weeks. The main reasons for the increase in the operating rate are the resumption of production by some die-casting zinc alloy companies, the drop in zinc prices, and the pre-holiday stocking by some companies. Additionally, some companies reported that the improvement in downstream orders was mainly due to the slight drop in zinc prices last week, fluctuating around 22,000-23,000 yuan/mt. A few downstream companies engaged in bargain hunting, leading to increased orders and production for die-casting zinc alloy companies in small hardware, small accessories, and auto parts.
So, have downstream orders for die-casting zinc alloy companies really improved? According to an SMM survey, some companies are still operating at about half capacity. Below is a breakdown by sector.
Luggage sector: Currently in the off-season for luggage accessories, many companies have reported a decrease in orders compared to before. These companies stated that many downstream luggage companies have shut down. This has a more severe impact on companies that primarily produce luggage accessories, with operating rates only at 50-60%.
Hardware sector: Many companies reported an increase in orders for small hardware. They noted that downstream orders tend to increase slightly when zinc prices fall and slow down when zinc prices rise. Some companies also saw a relative increase in orders for medals, while those with long-term orders for small hardware in clothing maintained stable production. However, companies with a high proportion of spot orders were also significantly affected. Currently, China's real estate market remains sluggish, and some companies reported a significant decrease in downstream orders. Orders for housing and furniture hardware remain relatively low, and downstream consumption has not improved. Similar to the luggage sector, companies primarily related to real estate also reported operating rates of only 50-60%, with local companies of the same type generally operating at low rates.
Automotive sector: Recently, some companies reported a slight increase in downstream orders for auto parts. The main reasons are a slight increase in China's auto production and sales and the impact of falling zinc prices, leading to low-price restocking by downstream auto companies, which in turn increased orders for die-casting zinc alloy companies and slightly raised their operating rates.
Additionally, in terms of exports, companies have generally seen a decrease in export orders recently. A few companies in Fujian still have export orders, but for most companies, export orders have decreased YoY. Orders to Europe and the US are relatively fewer compared to Japan, South Korea, and Southeast Asia. Anti-dumping policies in various countries have also suppressed the export of many Chinese goods, affecting various industries to different extents.
In summary, according to the SMM survey, the increase in orders and production mentioned above only applies to a small number of companies. Most companies in the current market are still facing a situation of low orders and low production. Therefore, the recent YoY increase in the operating rate is mainly due to the contribution from a small number of companies and the stability of large companies. Overall, although more than half of September has passed, the market has not yet reached a "boom" stage. It is only reflected in the MoM increase in the operating rate. Whether die-casting zinc alloy will boom in the future still requires more macro data, market sentiment, and zinc price trends.