Zinc Alloy Die-Casting Market: Q1 Order Trends and What to Expect in H2

SMM, March 27: The "Golden March and Silver April," traditionally a peak consumption season for downstream industries, is now halfway through. How has the consumption of die-casting zinc alloy in various downstream sectors performed in Q1, and what are the prospects for the future? The following will provide an analysis based on the zinc price background and downstream conditions in Q1.

Firstly, die-casting zinc alloy, due to its significant zinc usage, is notably influenced by zinc prices in terms of downstream consumption. From the overall zinc price background, Q1 saw zinc prices fall back from highs due to reduced post-holiday demand, followed by a slight recovery as domestic social inventories hit historical lows and downstream demand gradually improved. On the macro front, the Two Sessions post-Chinese New Year had a limited impact on zinc prices, with domestic zinc prices oscillating around 23,750 yuan/mt, providing a buffer period for end-use consumption amidst fluctuating prices.

According to SMM data, China's average operating rate for die-casting zinc alloy in Q1 (January-March) 2024 reached 34.58%. Based on current overall consumption trends, the operating rate for die-casting zinc alloy in Q1 this year is expected to increase by approximately 3% to 5% YoY. The lower operating rate last year was primarily due to the later timing of the Chinese New Year break and delayed consumption, whereas this year, some orders were rushed for export in Q1, coupled with strong order performance from large manufacturers, driving an overall increase in the operating rate. The following will analyze the consumption situation across various end-user sectors in Q1 this year.

Real Estate Sector: Slow Demand Recovery
Overall, Q1 was in the recovery phase of real estate construction. Specific data shows that China's cumulative sales area of commercial housing in February fell by 5.1% YoY, while the cumulative completed area of real estate dropped by 15.6% YoY. The construction of real estate was challenging due to low winter temperatures and extreme weather, leading to relatively ordinary performance in orders for furniture accessories, hardware, and bathroom fittings. Although the recent decline in zinc prices improved end-user orders for some companies, many believe this improvement was mainly due to restocking at lower prices, with actual consumer demand remaining weak. Companies also reported that the current market is still characterized by cut-throat competition, with intense price competition. High-quality products face potential risks of losing orders due to their slightly higher prices. Looking ahead to Q2, data shows that last year, the cumulative growth rate of China's real estate sales area narrowed from -19.95% in Q1 to -19.83% in Q2, while the cumulative growth rate of completed real estate area expanded from -20.45% in Q1 to -20.76% in Q2. Although the performance of real estate sales and completion data varied, the overall trend remained weak, with relatively sluggish data. The overall situation this year is expected to remain largely unchanged. From a macro policy perspective, the 2025 Two Sessions emphasized stability in the real estate sector, with "stopping the decline and stabilizing" as a core goal. Feedback from companies indicates that real estate-related hardware is significantly affected by zinc prices, with downstream demand improving at low prices and weakening at high prices. Companies lack confidence in real estate-related orders, and demand has not truly improved, requiring a longer time to transmit. Therefore, whether from data, policy, or company feedback, real estate sector orders in Q2 are expected to remain largely stable, with relatively small changes in demand.

Auto Parts Sector: Policy Support Stabilizes
In terms of auto parts orders, as of February, China's cumulative auto production reached 4.553 million units, up 16.2% YoY, while cumulative auto sales reached 4.552 million units, up 13.1% YoY. The 2025 auto trade-in policy continues, and according to the latest data from the China Consumers Association, as of March 14, the number of applications for the 2025 auto trade-in subsidy has approached 1.3 million. The overall performance of auto production and sales data is excellent, and die-casting zinc alloy auto parts orders remain relatively stable. Looking ahead to Q2, with the government's continued efforts in the basic consumption sector, the trade-in policy may provide some support for auto parts orders. Meanwhile, SMM believes that as Q2 approaches, domestic supply-side capacity and production are expected to gradually increase, which may weaken the subsequent support for zinc prices. Under lower prices, end-use demand in the auto parts sector may continue to be maintained. Additionally, based on the production and sales data from Q1 and Q2 last year, China's auto production and sales in Q2 were higher than in Q1, with a MoM increase of 9%-10%. Therefore, China's auto parts orders are expected to perform well in Q2.

Luggage Zippers and Electronics Sector: Overall Demand Remains Stable
In the luggage zippers sector, orders for such small hardware items have remained relatively stable after the Chinese New Year, with some companies reporting a slight YoY increase in orders this year, which are less affected by price. March is also the peak season for luggage zipper orders, but due to the warm winter this year, orders in March have weakened compared to February. However, the overall consumption performance of this sector remains relatively stable compared to other sectors. Domestic die-casting zinc alloy electronics orders are mostly concentrated in some companies in Guangdong. According to these companies, orders in this relatively high-tech sector have performed well overall, with strong end-user demand continuing from last year to the present. Specific end-use products include electronic components and optical modules. Looking ahead to Q2, April remains the peak season for luggage zipper orders, but due to this year's weather, downstream zipper orders are currently fluctuating downward, and Q2 order development is expected to be relatively average. Meanwhile, electronics orders are currently operating relatively normally, and companies report that demand for such orders has been relatively good since last year, with little change expected in Q2.

Export Orders Sector: Strong Start, Slowing Later
In terms of export orders, according to customs data, China's cumulative exports of die-casting zinc alloy reached 683.21 mt in January-February, up 37.89% YoY. The "rush to export" situation still exists in the first half of the quarter, but according to recent feedback from some companies, orders to Europe and the US have decreased, while orders to Southeast Asia remain relatively stable. However, some companies report that overall export orders remain relatively stable, and the impact of US tariffs has not yet fully materialized. In addition to the potential impact of tariffs, the ample inventory held by foreign traders also affects the export of domestic orders. Therefore, China's export orders in Q2 are expected to face some risk of reduction due to tariffs and other factors.

In summary, in Q1, the actual end-use demand for die-casting zinc alloy in China's real estate sector recovered slowly, while orders in other sectors remained relatively normal. Demand for daily small hardware orders performed well after the Chinese New Year, and the subsequent development of export orders still requires close attention, as potential risks may gradually emerge. Recently, domestic macro expectations for positive policy releases remain, with the Ministry of Finance stating that fiscal policy in 2025 will be more proactive. As the weather warms and downstream demand gradually recovers, domestic zinc alloy end-use demand is expected to continue improving.