SHANGHAI, Sept. 1 (SMM) - Zhejiang has suffered from environmental protection checks after release of the Notice Regarding Closures of Electroplating Plants in Yiwu City for Rectifications by Yiwu Environmental Protection Bureau on August 14, 2017. Zinc downstream producers, including die-cast zinc alloy producers, and electroplating plants, were forced to slash or suspend production. What’s the status quo of die-cast zinc alloy producers in Zhejiang Province?

Producer Scale

Zhejiang’s die-cast zinc alloy producers are mainly located in Ningbo, Wenzhou, Yiwu and Yuyao, with total capacity of about 400,000-tpy, which accounts for 21% of national total. These producers are mostly medium and small ones, whose capacities are mainly 10,000-20,000-tpy. About 12-15% of them have environmental licenses.

Status Quo

Die-cast zinc alloy producers in Zhejiang mainly receive orders from zippers, lockset, accessories, automobile and artware industries in the province, and earn profit from processing fees.

Processing fees of #3 zinc alloy are 800-1,000 yuan per tonne. Processing fees of die-cast zinc alloy are decided based on payment period by downstream producers. Die-cast zinc alloy producers are faced with strong cash pressure since they purchase raw material in cash, so they refused to accept orders with long payment period. Payment period by downstream buyers has shortened in Zhejiang. Some better-capitalized producers absorb some orders.

Some SMEs cut or suspended production in 2017 due to environmental protection and capacity elimination policy, reducing overcapacity. In the face of environmental protection checks, most producers shift from coal to gas so as to maintain normal production. After entry of central environmental protection teams in mid-August, most die-cast zinc alloy producers in Zhejiang shut down due to production halts at downstream producers and environmental protection factor. SMM survey finds zinc alloy output in Zhejiang fell 40-45% in August from July. Some producers were reluctant to produce due to strict environmental protection requirements. Environmental protection teams will leave Zhejiang Province on September 11, and SMM will track whether production at local zinc alloy producers will recover. 

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