Copper, Aluminum, and Zinc "Surge Ahead," While Die-Casting Zinc Alloy Profits Are "Eroded"?

SMM News on January 13:
According to SMM data, as of last Friday, the average Zamak 5 zinc alloy processing fees in Guangdong, Zhejiang, and Jiangsu rose by 25 yuan/mt to 1,250 yuan/mt; the Zamak 5 zinc alloy processing fees in Fujian also increased by 25 yuan/mt to 1,200 yuan/mt. Although Zamak 3 processing fees also saw increases in the market, they remained within the SMM price range overall, so no adjustments were made this time. The average rate in Guangdong, Zhejiang, and Jiangsu remained at 675 yuan/mt, while Fujian maintained 575 yuan/mt.

Regarding the reasons for the increase, the current rise in TCs was consistent with the hike last November, both driven by higher raw material costs for alloy plants.

In terms of specific price spreads, as of January 9, SMM data showed that domestic zinc ingot prices stood at 24,030 yuan/mt, aluminum ingot prices at 24,030 yuan/mt, and copper prices at 100,275 yuan/mt, up 710 yuan/mt, 1,570 yuan/mt, and 1,455 yuan/mt, respectively, compared to the last trading day before the holiday, with gains of 3.04%, 6.99%, and 1.47%. From a monthly average spread perspective, the zinc-aluminum monthlyaverage spread narrowed from 1,144 yuan/mt in December to 140 yuan/mt this month, while the zinc-copper monthly average spread widened from -70,096 yuan/mt to -77,840 yuan/mt this month. Amid wild price swings, die-casting zinc alloy plants saw profits significantly squeezed, leading to increases in alloy processing fees for both No. 3 and No. 5 alloys to varying degrees. Additionally, according to SMM, current spot order quotations in the market were generally relatively high, with some enterprises reporting Zamak 5 prices around 1,600–1,700 yuan/mt and Zamak 3 prices around 700–800 yuan/mt, though specific prices may vary depending on transportation distance.

Looking ahead, uncertainties in base metal performance remain significant, with frequent disruptions from the macro perspective. Coupled with the strong performance of copper and aluminum prices, the zinc-aluminum price spread narrowed to 0 yuan/mt today, while copper prices continued to trade above 100,000 yuan/mt. Cost pressure from raw materials persists. If the zinc-aluminum spread narrows further and the zinc-copper spread widens, die-casting zinc alloy processing fees are expected to have some room for increase.