China-US Joint Statement Stimulates Market Vitality: How Has the Recent Consumption Been in Various Downstream Sectors of Die-casting Zinc Alloy? [SMM Analysis]

SMM May 16 News:

On May 12, China and the US issued the "Joint Statement on the China-US Geneva Economic and Trade Talks," in which the US committed to rescinding the additional tariffs totaling 91% imposed on Chinese goods under Executive Order 14259 of April 8, 2025, and Executive Order 14266 of April 9, 2025, and to modifying the 34% reciprocal tariff imposed on Chinese goods under Executive Order 14257 of April 2, 2025. Among these, the imposition of 24% of the tariffs will be suspended for 90 days, while the remaining 10% will be retained. Correspondingly, China will rescind the retaliatory tariffs totaling 91% imposed on US goods. For the 34% retaliatory tariffs corresponding to the US reciprocal tariffs, the imposition of 24% of the tariffs will be suspended for 90 days, while the remaining 10% will be retained. China will also correspondingly suspend or rescind non-tariff retaliatory measures against the US.Trade tensions have eased somewhat.

Against the backdrop of evolving macroeconomic conditions, how has the downstream consumption of die-casting zinc alloy in China performed recently?

First, from the perspective of zinc prices and the operating rate of die-casting zinc alloy, domestic zinc prices in April were influenced by macroeconomic fluctuations, continuously declining to a new low in 2025, falling below 22,000 yuan/mt. The low prices prompted most end-user enterprises to buy the dip, coupled with some end-user enterprises in the market taking limited "rush exports" actions, thereby driving an improvement in orders for die-casting zinc alloy enterprises in April.In terms of the operating rate, China's die-casting zinc alloy operating rate in April was 49.71%, up 1.09 percentage points MoM and 6.77 percentage points YoY.The following analysis will be conducted from the perspectives of the real estate sector, the auto parts sector, exports, and other sectors.

Real Estate Sector

Judging from recent real estate data, in March, the cumulative growth in China's commercial housing sales area was -3%, and the cumulative growth in the area of completed real estate projects was -14.3%. Although there was a slight improvement in the cumulative YoY figures, the data performance remained relatively sluggish.Meanwhile, from the actual feedback of enterprises, the current overall consumption of real estate hardware fittings is relatively stable. However, low-price competition in the market is particularly fierce, with many substitutable materials available, and the phenomenon of cut-throat competition in the industry is significant. On May 7, the State Council Information Office held a press conference to introduce the "Package of Financial Policies to Support Market Stability and Expectation Stability," which includes measures such as the PBOC reducing the reserve requirement ratio (RRR) by 0.5 percentage points, expected to provide approximately 1 trillion yuan in long-term liquidity to the market. This also creates favorable conditions for boosting demand for real estate hardware fittings. Meanwhile, Q2, as the traditional peak season for the home decoration industry, is expected to drive consumption of various hardware fittings.

Auto Parts Sector

According to data from the China Association of Automobile Manufacturers (CAAM), in April, China's cumulative automobile production reached 10.175 million units, and cumulative sales reached 10.06 million units, with cumulative YoY growth rates of 12.9% and 10.8%, respectively. Although it still recorded a positive value, the growth rate slowed down compared to the previous month. Meanwhile, according to feedback from enterprises, the overall demand for auto parts orders has weakened recently, but the demand for terminal automotive LED lighting accessories remains good. Currently, domestic subsidies for trade-in of old vehicles still play a certain role in driving automotive consumption. Meanwhile, with the easing of international trade tensions, it is expected that the demand for auto parts will remain relatively stable in the future.

Export Sector

Driven by the easing of Sino-US trade relations, some downstream export orders for die-casting zinc alloy showed signs of a slight recovery this week, mainly concentrated in areas such as daily hardware and bathroom hardware.However, frequent changes in tariff policies in the past have led to unstable market expectations, with many enterprises pointing out that there is still uncertainty in current export orders. From the actual process perspective, after overseas customers confirm orders, domestic enterprises need to go through production, manufacturing, and maritime transportation, with an overall cycle of approximately 1-2 months. Due to this long cycle, die-casting zinc alloy enterprises and terminal customers remain cautious about accepting export orders.

In summary, the recent low-price effect has driven an MoM increase in the operating rate of die-casting zinc alloy enterprises. Meanwhile, the recent easing of Sino-US trade relations has also boosted market confidence to a certain extent. However, domestic consumption is gradually entering the off-season, and orders for luggage zippers have already decreased in April. Although domestic trade-in policies are boosting consumption, enterprises are also concerned that domestic consumption enthusiasm may gradually pull back in the future. Overall, enterprises maintain a cautious attitude towards future end-use demand. SMM will continue to monitor terminal orders and export dynamics in the future.

(The above information is based on market collection and comprehensive assessment by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make cautious decisions and should not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.)

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