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[SMM Analysis] the start of the Die casting Zinc Alloy Plant in April will continue in May?
May 14,2020 15:01CST
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Source:SMM
SMM5 14: April Die casting Zinc Alloy Plant overall performance is low, month-on-month, year-on-year decline, the start of the decline in line with our previous expectations.
The content below was translated by Tencent automatically for reference.

SMM5 14: April Die casting Zinc Alloy Plant overall performance is low, month-on-month, year-on-year decline, the start of the decline in line with our previous expectations.

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According to our research data, the operating rate of die casting zinc alloy enterprises in April was 30.84%, down 14.32 percentage points from the previous month and 23.7 percentage points from the same period last year. To investigate the reasons, we think that there are the following points:

1. The export enterprises involved in the end customers of the die casting zinc alloy factory are greatly affected by the overseas epidemic situation, and the overseas cancellation and postponement of orders are obvious, resulting in a sharp decline in new orders and affecting demand.

2. End customers increase purchases when zinc prices fall sharply in mid-and late March, overdrawing April consumption, resulting in a decline in short-term demand.

3. The cost advantage of smelter self-produced die-casting zinc alloy is low, and the impact of the original sales channel of die-casting alloy factory has a great impact on the start-up of the alloy plant.

On the whole, the end customers of large die casting zinc alloy plants are generally involved in export, the current export orders are low, the decline of terminal construction is obvious, the impact on large plant orders is greater, the decline of start is obvious; some medium alloy plants are mainly based on domestic orders, in the case of steady recovery in domestic demand, the overall order volume is supported; Orders from small alloy factories have been squeezed, while the decline in start-up has been even more pronounced in the face of falling overall demand. Smelter self-produced die-casting zinc alloy because of poor sales and cost advantages, the overall processing cost is low, for the die-casting zinc alloy factory, the original sales channel is obviously affected by this impact, coupled with the purchase of zinc ingots for the production of alloy costs are higher, due to this limitation, the space for processing fees to be reduced is limited, and does not have the market competitiveness, and under the present situation of weak terminal demand, the sales pressure of die casting zinc alloy factory is greater. In terms of raw material procurement, the current zinc price continues to rise, and the alloy factory is not willing to increase the purchase of raw material zinc ingots when there is no obvious improvement in downstream orders, which mainly focuses on sales and fixed production, which also reduces the overall inventory days of raw material zinc ingots to 6 days.

In May, the current terminal foreign trade orders still did not improve significantly. Although many overseas places began to resume work and resume production, the demand was still not reflected in the short term. Most of the downstream were pessimistic about May orders, and the overall start of construction changed little compared with April. however, most of the downstream orders are based on the current order level to determine the situation of follow-up orders. We believe that as overseas work resumes production one after another, whether overseas orders will improve is not expected to be determined until late May. The actual demand for the terminal may not be as pessimistic as expected.

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