SMM August 18:
As Q3 2026 reaches the halfway mark, how has recent consumption of die-cast zinc alloys performed? What are companies’ expectations for demand going forward?
Die-Cast Zinc Alloy:
According to SMM data, the operating rate of die-cast zinc alloy producers stood at 38.18% in July, down 2.28 percentage points month-on-month and 5.22 percentage points year-on-year. Since entering August, the weekly operating rate of die-cast zinc alloy producers has remained around 40%-50%. The market is still in the traditional consumption off-season, with overall demand across downstream sectors remaining subdued.
In terms of end-user orders, demand in sectors such as hardware for real estate, automotive hardware, luggage and zipper hardware, as well as medals and ornaments has remained weak. Although some companies reported relatively stable orders, overall market conditions indicate that end-user consumption remains sluggish, with industry demand still under pressure.
SMM previously expected the overall operating rate of the die-cast zinc alloy industry to remain broadly in line with July, with the operating rate of the new sample expected to reach 38.22%. However, in early August, alloy producers in East China continued to face production suspensions and shutdowns due to extreme weather. Meanwhile, downstream consumption has received limited support amid high and volatile zinc prices. Small and medium-sized downstream manufacturers remain cautious about their expectations for future orders, while short-term demand lacks sufficient momentum for improvement.
Based on actual market performance and companies’ expectations, the operating rate of the die-cast zinc alloy industry is expected to remain relatively weak overall, with downside risks to the August operating rate. Companies also remain relatively cautious about their longer-term consumption outlook.
Zinc Oxide:
According to SMM data, the operating rate of zinc oxide producers stood at 44.94% in July, down 3.78 percentage points month-on-month and 1.88 percentage points year-on-year. Since entering August, the weekly operating rate of zinc oxide producers has recovered somewhat, driven by the resumption of production at some companies. SMM expects the operating rate of zinc oxide producers to edge up to around 45.07% in August, an increase of 0.13 percentage points month-on-month, although it is expected to remain relatively weak year-on-year.
August is a period of preparation ahead of the traditional peak consumption season. However, current consumption has yet to show any significant improvement. By segment, according to data from the China Passenger Car Association (CPCA), national retail sales of passenger vehicles reached 317,000 units from August 1 to 9, down 22% year-on-year and 3% month-on-month, indicating a weak start. Meanwhile, some tire manufacturers remained shut down during the first half of August, placing some pressure on demand for rubber-grade zinc oxide. Demand for ceramic-grade zinc oxide has been affected by the property market, with insufficient support from end-user demand. Although current consumption of feed-grade zinc oxide remains sluggish, demand is expected to improve somewhat with the upcoming Mid-Autumn Festival and NationalDay holidays. Electronic-grade zinc oxide has remained relatively stable overall, with some growth opportunities expected as the peak season approaches in September and October, and some market participants remain optimistic about demand in this segment.
Overall, high zinc prices continue to exert some pressure on end-user consumption of both die-cast zinc alloys and zinc oxide, and the market has yet to show any significant signs of a consumption recovery in August. As previously idled producers gradually resume operations and the traditional peak consumption season approaches, the operating rate of zinc oxide producers is expected to have some room for a modest short-term recovery, although it is still expected to remain in negative year-on-year growth. Meanwhile, die-cast zinc alloys remain more heavily affected by high zinc prices, while lingering disruptions from extreme weather in East China are expected to limit the upside potential for operating rates.
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