Pessimistic outlook for zinc die-casting alloy market in 2020

Asian Metal: Hello Mr. Yang, thanks for accepting our interview. Please briefly introduce your company and production.

Mr. Yang: Our company was established in 2012 and is located at Meilin Lixi Industrial Area. Specializing in zinc die-casting alloy production, we mainly produce national standard zinc die-casting alloy Zamak-3 and Zamak-5. With an annual production capacity of 48,000t for zinc die-casting alloy, we run with an operating rate of about 1/4 now and produce about 1,000tpm of the material due to the dim market demand.

Besides, the company also trades copper scrap and non-standard aluminum alloy, with a monthly trading volume of 400t for copper scrap and 2,000t for the latter.

Asian Metal: What are your main products and where are they mainly used?

Mr. Yang: We mainly produce national standard zinc die-casting alloy Zamak-3 and Zamak-5, but can produce customized zinc alloys. At present, we have many clients in the downstream sanitary industry, and we also set foot in luggage, hardware, auto parts and other industries.

Asian Metal: How is the current zinc die-casting alloy demand? And what do you think are the reasons?

Mr. Yang: The whole year of 2019 witnessed weak demand for zinc die-casting alloy. We produced more than 20,000t of the material in 2018 but reduced the production by about 1/3 in 2019, seeing substantially decreased demand from hardware and sanitary industries. In my opinion, one reason is that some producers cut production affected by environmental protection policy in China, and the other one is the dropped exports impacted by China-US trade war, leading to less demand for zinc die-casting alloy.

Asian Metal: Environmental inspection is a problem every producer would face, so does your company make investment in environmental protection? And does environmental inspection have any impact on your production?

Mr. Yang: Our company finished the conversion of coal to natural gas in 2015, and now completely meets environmental standards. However, we would cut or suspend production required by the government for good air quality for big events.

Asian Metal: What do you think are the main difficulties the zinc die-casting alloy industry is faced with at present?

Mr. Yang: On the one hand, companies are facing tight capital due to the slow payment collection from downstream consumers; on the other hand, besides zinc ingot, zinc ingot smelters produce zinc die-casting alloy itself, which has great impact on our company and even the whole zinc die-casting alloy industry. With low zinc ingot cost, smelters sell zinc die-casting alloy at low prices, and many large consumers directly purchase the material from smelters, so the profit is largely squeezed.

Asian Metal: In your opinion, how does zinc die-casting alloy industry deal with this situation?

Mr. Yang: We should work hard to improve product quality and after-sale service to retain customers.

Asian Metal: What is your expectation of zinc die-casting alloy market in 2020?

Mr. Yang: I believe that the demand for zinc die-casting alloy would still be weak in 2020, and there is no sign of downstream consumption picking up for the time being.

Asian Metal: Prices for zinc ingot, the raw material, are closely bound up with those for zinc die-casting alloy, and how do you see zinc ingot price trend in 2020?

Mr. Yang: Most upstream zinc smelters are operating at full capacity due to high profit margins now, and imported zinc ingot flows into China, so the supply of zinc ingot is expected to be surplus in 2020. In addition, the macro economy trend is not clear yet, so I believe zinc ingot prices would be likely to fluctuate in 2020, with the bottom to be about RMB16,000/t (USD2,304/t).

Asian Metal: Would you please share your development goal?

Mr. Yang: Our clients are mainly in Fujian province now, and we will spare no efforts to boost the company strength and plan to sell our products to Zhejiang and Guangdong in the coming year to enhance the market share.

Asian Metal: Thank you for your accepting our interview again. Wish your company a better future!

Mr. Yang: Thanks.