At the 2024 SMM 19th Lead and Zinc Conference and Lead and Zinc Technology Innovation Forum - Zinc-based Materials Forum hosted by SMM, Han Zhen, senior analyst of SMM lead and zinc, talked about the current situation of China's die-cast zinc alloy and looked forward to its future development. She said that according to SMM research, by 2025, the new production capacity of die-cast zinc alloy in smelters may reach about 220,000 tons. Up to now, the total production capacity of die-casting zinc alloy in smelters across the country may reach more than 700,000 tons, and there are more than 2 million die-casting zinc alloy processing enterprises.
The proportion of zinc's five major terminal consumption
In 2023, the proportion of galvanized and zinc oxide consumption will increase slightly, and the proportion of die-casting will decline again
SMM sorted out the proportion of the five major terminal consumption of zinc - galvanization, die-cast zinc alloy, zinc oxide, brass, batteries and other consumption since 2016 and found that the proportion of galvanized and zinc oxide consumption in 2023 has increased compared with previous years, with the proportion of galvanized consumption increasing to about 69.23% and zinc oxide increasing to about 4.38%, but the proportion of die-cast zinc alloy has decreased from 11.02% in 2022 to 10.03% in 2023.
The proportion of the main consumption regions of the three major sectors
SMM sorted out the proportion of the main consumption areas of the three major sectors of the zinc downstream, and among the main consumption areas of the galvanizing industry, the consumption in North China and East China accounted for more than 90%, of which North China accounted for about 63% and East China accounted for about 28%.
In terms of die casting, East China and South China contributed the main proportion of consumption, with East China accounting for about 59% and South China accounting for about 27%, accounting for more than 85% in total.
In the zinc oxide sector, the consumption in East China and North China accounts for about 80%, of which East China accounts for about 63% and North China accounts for about 20%.
The increase in the alloying ratio of smelters has inhibited the start of zinc alloy enterprises to a certain extent
Starting in 2023, the proportion of alloying in smelters will increase significantly
According to SMM data, since 2023, the output of die-cast zinc alloy in smelters has shown an increase compared with previous years, and the proportion of die-cast zinc alloy output has begun to increase.
New production capacity of die-casting zinc alloy at the smelter
According to SMM research, by 2025, the new production capacity of die-cast zinc alloy in smelters may reach about 220,000 tons. Up to now, the total production capacity of die-casting zinc alloy in smelters across the country may reach more than 700,000 tons, and there are more than 2 million die-casting zinc alloy processing enterprises.
The production of die-cast zinc alloys by smelters has a natural advantage
The following diagram is a schematic diagram of the process of producing die-cast zinc alloys from zinc concentrate:
Compared with ordinary die-casting zinc alloy manufacturers, the smelter has more natural advantages in producing die-casting zinc alloy, and the smelter directly proportions the die-casting zinc alloy ingot from the zinc liquid, which reduces the production, transportation and remelting process of 0# zinc ingot of ordinary die-casting zinc alloy manufacturers, reduces the production cost by 150~200 yuan/ton, and has the advantage of processing cost; the same brand of zinc liquid, the product quality and mechanical properties are stable.
It still takes time for consumption recovery to verify that the start of die-casting zinc alloy is weak year-on-year
Judging from the monthly operating rate data of the new sample of SMM die-casting, since the Spring Festival, the monthly operating rate of die-casting zinc alloy has shown an upward trend as a whole, but the performance is slightly weaker than that of previous years, and the recovery of consumption still needs to wait for time to verify.
The start of die-casting zinc alloy is negatively correlated with the inventory in Guangdong
According to SMM research, through the trend of Guangdong inventory and die-casting zinc alloy operating rate in previous years, the two are negatively correlated, and the inventory in Guangdong will decline, and the operating rate of die-casting zinc alloy will increase, on the contrary, the operating rate will decline.
Zinc-aluminum price spreads narrowed, and corporate profits were compressed
The mainstream elements of die-cast zinc alloy are zinc, aluminum and copper, and since 2023, the price of zinc and aluminum has gradually shrunk, resulting in the gradual compression of the profits of die-casting zinc alloy enterprises.
The copper-zinc spread has risen, and the spread of 3# and 5# alloy processing fees has widened
With the rise of the copper-zinc price spread, the price difference of 3# 5# alloy processing fees is also gradually expanding.
Although the mainland is still a net importer of die-cast zinc alloys, the volume of exports to Southeast Asia is gradually increasing
At present, the mainland is still a net importer of die-cast zinc alloy, and the import countries are mainly in Southeast Asia, but according to the export countries of die-cast zinc alloy in recent years, the volume of mainland exports to Southeast Asia is also gradually increasing.
Die-cast zinc alloy performance at each end
Let's take a look at the performance of the die-casting zinc alloy terminals, the real estate sector, the front-end land inflection point has passed, and the real estate completion data has decreased by more than 20% year-on-year; Previously, the Ministry of Commerce and other 14 departments issued the "Action Plan for Promoting the Trade-in of Consumer Goods" to add another boost to the automobile and home appliance sectors. The home appliance data has increased since July 2023, and the future is also worth looking forward to, but it should be noted that the recovery of the consumer confidence index still needs time to be transmitted.
The processing cost of traditional die-cast zinc alloy is relatively stable, and there may still be a market for customized alloys
According to SMM data, whether it is 3# die-casting zinc alloy sub-regional processing fee or 5 ¥ die-casting zinc alloy sub-regional processing fee, all places have maintained a relatively stable trend, SMM expects that customized alloys may still have a market.
The substitution of stainless steel has increased, and the substitution of copper and aluminum has decreased
From the comparison of zinc-aluminum-copper-stainless steel spreads, zinc-stainless steel spreads are between zinc-aluminum spreads and copper-zinc spreads, which are more economical for die-casting zinc alloy enterprises, with stainless steel substitution increasing and copper and aluminum substitution decreasing.
Export orders are expected to increase in 2024
According to SMM research, the total export value is positively correlated with the operating rate of die-cast zinc alloy, and the cumulative year-on-year growth rate of the exports of the three major white ——, air conditioners, refrigerators and washing machines has also remained above 20%, so SMM expects that the export orders of die-cast zinc alloy may increase in 2024.
On the whole, in the current domestic die-casting zinc alloy market, the alloying ratio of smelters has increased significantly since 2023, and it is expected that by 2025, the new production capacity of die-casting zinc alloy in mainland smelters may reach about 220,000 tons. As for the follow-up die-casting zinc alloy terminal consumption expectations, SMM believes that the current peak period of real estate has passed, and looks forward to the follow-up performance of exports, automobiles and home appliances.