Operations at zinc die-casting plants further slow in Jun as demand falters

SHANGHAI, Jul 11 (SMM) – Zinc alloy die-casting plants in China further scaled back operations in July, showed an SMM survey, as demand weakened in a traditional low season. Ongoing trade conflicts with the US and a global downturn also took a toll.

SMM data released on Thursday July 11 showed that operating rates across Chinese manufacturers of zinc alloy die-castings averaged 46.32% in June, down 0.82 percentage point from May and 2.32 percentage points from June 2018.

This was the second straight month of decline, after an on-month drop of 7.4 percentage points in May.

The SMM survey covered a total of 30 plants across Shanghai, Zhejiang, Jiangsu, Fujian, Guangdong and Sichuan etc. Capacity totalled 989,400 mt, with 42,000 mt idle.

Rates for large plants, with annual capacity of above 50,000 mt, slipped 1.06 percentage points from a month ago to 42%, while rates for plants that can produce 20,000-50,000 mt in a year inched up 0.22 percentage point to 46.63%.

Small plants, with annual capacity of less than 20,000 mt, operated at 74.79% last month, down 0.82 percentage point from May.

As new orders sharply shrank, inventories of finished goods at zinc die-casting plants grew. Producer slashed production to rein in stocks.

Hardware fittings, zips, bathroom accessories, electronic locks and automotive components are major consumers of zinc die-castings.

The zip sector received the greatest impact from the trade dispute with the US, as export orders took accounted for a sizeable portion.

Orders from automotive components moderately shrank last month, as the auto market remained anemic.

The hardware and bathroom accessories sectors held stable in June.

Operations across Chinese zinc alloy die-casting plants are expected to further slow in July, in anticipation of summer maintenance and the deteriorating zip sector.

SMM expects the average operating rate to fall 2.96 percentage points from June and 6.16 percentage points from July 2018 to stand at 43.36% this month.