On the "Double Dilemma" in the Die-casting Zinc Alloy Market: Declining Demand and Overcapacity

SMM June 10 News:
According to SMM data, the operating rate of die-casting zinc alloy in May was 40.64%, down 1.58 percentage points month-on-month and 6.46 percentage points year-on-year.

From the perspective of end-user demand, multiple indicators including real estate completions, automobile production and sales, and household appliance output all weakened year-on-year. In addition to slowing demand, the actual production days of some enterprises were reduced due to the May Day holiday in May. Coupled with persistently high zinc prices, off-season demand was further suppressed. At the same time, external demand also performed poorly. From a regional perspective, demand for hardware accessories exported to Southeast Asia remained relatively stable; orders for ornaments and zippers exported to Europe were weak, but orders for toy hardware were relatively good. However, due to US-Iran negotiations and the "restricted navigation" in the Strait of Hormuz, domestic orders for hardware products exported to the Middle East continued to weaken, dragging down the overall die-casting zinc alloy market.

The average operating rate of die-casting zinc alloy in the first five months of this year was 6.52% lower than last year. Besides weak domestic and external demand, overcapacity in the domestic die-casting zinc alloy market is also an important reason. Overcapacity has led to intensified low-price competition in the market. Meanwhile, smelters, leveraging their cost advantages, continue to erode the market, driving up the "trading-oriented" ratio of private enterprises. Facing the dual pressure of production costs and demand, most manufacturers prefer to purchase smelter alloy and resell it to reduce costs, while gradually shifting themselves to customized alloy production to meet specific customer needs and ensure profit margins.

Looking ahead, die-casting zinc alloy enterprises will be less affected by holidays in June, and some enterprises plan to resume formal production at the end of June. It is expected that the operating rate of die-casting zinc alloy will rise slightly and fluctuate around 40.89%.