Aug Operating Rates of Die-Casting Zinc Alloy Producers Continue to Fall YoY and MoM, with Limited Rebound Space in September [SMM Analysis]

SMM, September 8:

       According to SMM data, the operating rate of the new sample of die-casting zinc alloy enterprises stood at 37.61% in August, down 0.58 percentage points MoM and down 5.45 percentage points YoY. Why did the operating rate of die-casting zinc alloy continue to decline both MoM and YoY in August? What are the market expectations for September?

       Looking first at August, the decline in operating rates was mainly driven by two factors. On one hand, zinc prices fluctuating at highs suppressed market procurement and sales. In August, the zinc price center rose notably, dampening downstream procurement enthusiasm, and alloy plants faced pressure on both order-taking and shipments. During the month, when zinc prices pulled back, terminal users showed renewed enthusiasm for price-based procurement, and market transactions improved somewhat, but the sustainability was limited. On the other hand, heavy rain in parts of east China during the month affected alloy plant operations.

Secondly, looking at end-user orders. August was in the consumption off-season, and orders across sectors such as real estate hardware, auto parts hardware, luggage zipper hardware, decorative accessories, and medal ornaments were generally mediocre. The market was dominated by just-in-time orders, with limited growth. Die-casting zinc alloy enterprises generally reported that current zinc price fluctuations had a significant impact on downstream procurement pace—when zinc prices rose, wait-and-see sentiment intensified, and when prices pulled back, price-based procurement was released, causing market transactions to fluctuate accordingly.

       Looking ahead to September, SMM expects the operating rate of the die-casting zinc alloy industry to edge up only slightly, with the new sample operating rate expected to rise to around 38.38% and consolidate, up 0.77 percentage points MoM. Currently, the zinc price center continues to move higher in September, and terminal hardware enterprises are mainly making just-in-time procurement. Constrained by high raw material costs, downstream stockpiling willingness remains weak, which is transmitted to the die-casting zinc alloy production side, making alloy enterprises cautious about September consumption expectations and thus limiting the extent of the industry's operating rate rebound. Looking at specific data, in the first week of September, the die-casting zinc alloy market still showed a heavy wait-and-see atmosphere, with no signs of the "September peak season" yet emerging.

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