SMM January 15 News:
With half of January 2025 gone, how did the die-casting zinc alloy sector perform in 2024? Has it regained its vitality?
Looking at the overall performance in 2024, the annual operating rate of die-casting zinc alloy reached 43.21%, up 1.3% YoY compared to 41.91% in 2023. This performance is noteworthy, so what were the driving factors behind it?
According to SMM, the die-casting zinc alloy industry performed better in 2024 than in 2023, attributed to several factors. Firstly, thanks to the implementation of the domestic trade-in policy, market demand in related sectors increased. For instance, in 2024, China's automobile production rose 3.7% YoY, while sales grew 4.5%. Washing machine production increased 6.3% YoY, refrigerator production rose 8.1% YoY, and air conditioner production surged 18.02% YoY. Secondly, at the end of 2024, following the US presidential election, Donald Trump returned to office. Many die-casting zinc alloy end-user enterprises adopted a "rush export" strategy to mitigate potential tariff risks in 2025, boosting overall zinc alloy production. Additionally, customs data showed that from January to November 2024, China's die-casting zinc alloy exports totaled 4,659.39 mt, up 54.58% YoY.
Regarding the market outlook for China's die-casting zinc alloy in 2025, we can analyze from three aspects: zinc prices, policies, and exports. Firstly, in terms of zinc prices, H2 2024 saw strong zinc prices due to tight supply. However, looking ahead to 2025, the tight supply of domestic and imported ore is expected to ease significantly, which may gradually weaken support for zinc prices. Lower zinc prices are expected to stimulate downstream consumption growth.
Secondly, from a policy perspective, on January 8, 2025, the National Development and Reform Commission (NDRC) and the Ministry of Finance issued the "Notice on Intensifying and Expanding the Implementation of Large-Scale Equipment Upgrades and Trade-In Policy for Consumer Goods in 2025." Article 10 of the notice stated that further support would be provided for the trade-in of household appliances, including eight traditional categories such as refrigerators, washing machines, televisions, and air conditioners, with subsidies extended to four additional categories: microwave ovens, water purifiers, dishwashers, and rice cookers. Meanwhile, the real estate sector, which accounts for a significant portion of downstream consumption of die-casting zinc alloy, also released positive signals. On December 9, 2024, the Central Political Bureau held a meeting to analyze and study economic work for 2025, emphasizing the stabilization of the real estate market. This sent another positive signal for stabilizing the real estate market. Additionally, starting January 1, 2025, the commercial loan mortgage rate was reduced by 60 basis points to 3.3%. Such policies are expected to boost domestic demand for zinc alloy. Lastly, from an export perspective, Guangdong is a key province for die-casting zinc alloy production, with numerous export-oriented enterprises. However, after Donald Trump’s inauguration on January 20, his campaign proposal to impose a 10% to 20% tariff on all imported goods, though pending specific implementation details, will undoubtedly exert some pressure on China's die-casting zinc alloy exports.
In summary, although China's zinc alloy enterprises may face export resistance in 2025, domestic demand is expected to improve against the backdrop of favorable domestic policies and a pullback in zinc prices. Therefore, the overall consumption level of die-casting zinc alloy in 2025 is expected to be relatively similar to that of 2024.
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