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

SMM May 19 Report:

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. The US also agreed to modify the 34% reciprocal tariff imposed on Chinese goods under Executive Order 14257 of April 2, 2025, by suspending the imposition of 24% of the tariff for 90 days while retaining the remaining 10%. In response, China rescinded the retaliatory tariffs totaling 91% imposed on US goods. For the 34% retaliatory tariff targeting US reciprocal tariffs, China correspondingly suspended 24% of the tariff for 90 days while retaining the remaining 10%. China also suspended or rescinded corresponding non-tariff retaliatory measures against the US.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 China's die-casting zinc alloy performed recently?

First, from the perspective of zinc prices and the operating rate of die-casting zinc alloy enterprises, domestic zinc prices in April were influenced by macroeconomic fluctuations, declining continuously to a new low in 2025 and 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, auto parts sector, exports, and other sectors.

Real Estate Sector

Looking at recent real estate data, the cumulative growth in the sales area of commercial housing in China in March was -3%, and the cumulative growth in the completed area of real estate was -14.3%. Although there has been a slight improvement in the cumulative year-on-year figures, the data performance remains relatively sluggish. Meanwhile, based on actual feedback from enterprises, the overall consumption of real estate hardware fittings is currently relatively stable. However, the market is experiencing intense low-price competition, with many substitutable materials available, and the phenomenon of cut-throat competition within 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 stabilization and expectation management," which includes measures such as the People's Bank of China 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 the demand for real estate hardware fittings. Meanwhile, Q2, as the traditional peak season for the home improvement industry, is expected to drive the 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 year-on-year growth rates of 12.9% and 10.8%, respectively. Although still positive, the growth rates have slowed compared to the previous month. Meanwhile, based on enterprise feedback, the overall demand for auto parts orders has weakened recently, but the demand for terminal automotive LED headlight fittings remains good. Currently, domestic subsidies for trade-in policies in the automotive sector can still play a certain role in driving automobile consumption. Meanwhile, with the easing of international trade tensions, the demand for auto parts is expected to remain relatively stable in the future.

Export Sector

Boosted by the easing of Sino-US trade relations, some export orders for downstream die-casting zinc alloy products showed signs of slight recovery this week, primarily concentrated in daily hardware and bathroom hardware sectors. 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 perspective of the actual process, after overseas customers confirm orders, domestic enterprises need to go through production, manufacturing, and maritime transportation, with an overall cycle of approximately 1 to 2 months. Due to this long cycle, die-casting zinc alloy enterprises and end-users 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, with orders for luggage zippers already decreasing in April. Additionally, although the domestic trade-in policy has stimulated 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. Subsequently, SMM will continue to monitor end-user orders and export dynamics.