Zinc die-casting alloy demand to stay weak
----Interview with Deliang Deng
General Manager
Yunnan Chengliang Alloys Material Co., Ltd.
- Turkey Laman Mining Co., a 100% foreign-owned mining company, is one of the subsidiaries of Bros Industry Holding Inc., who has branches in 5 different countries. The company operates, produces and exports base metals, rare metals, secondary materials and platinum group metals in various regions in Turkey. Bros Industry Holding Inc. acquired MGH Mining Enterprise Co. in June 2023 and started its mine business in the name of Laman Mining Co.
- Asian Metal: Welcome to the interview by Asian Metal Mr. Deng. Please briefly introduce your company.
- Mr. Deng: Yunnan Chengliang Alloys Material Co., Ltd., with an annual production capacity of 60,000 tons of zinc alloys, plans to produce about 24,000 tons of zinc alloy products in 2023. We specialize in the production of various types of zinc die-casting alloy. Based on the concept of environmental protection, our products have passed SGS certification and comply with national standards and EU ROHS directives. They are widely used in automobiles, electronics, communications, hardware, digital equipment, surface treatment and other fields. The company adopts the leading technology of liquid metal, advanced process equipment and automated production lines, which not only reduce energy consumption, but also efficiently make products with stable quality and provide customized business and service. Chengliang Alloys Material always provides clients with products of maximum value having first-class technology and service as well as excellent quality and innovation.
- Asian Metal: How was the demand in the zinc die-casting alloy market in Q2 compared with the same period last year?
- Mr. Deng: In Q2 2023, the overall market demand for zinc die-casting alloy was very poor compared with the same period in previous years. Against the same period last year, orders in locks, sanitary ware and other industries fell sharply and those in some industries decreased by 30%-50%, while orders in the electronics industry and new energy automobile industry basically remained stable. We received relatively sufficient orders from the clothing industry in early-to-mid March, but such orders began to decrease in late March.
- Asian Metal: What do you think are the reasons for the decline in demand for zinc die-casting alloys?
- Mr. Deng: Firstly, the income of residents has been greatly affected due to the COVID-19 epidemic. Some residents' savings have been exhausted, and their expectations for future income have declined, resulting in a reduction in consumption capacity. This decreasing trend is also transmitted to the zinc die-casting alloy industry, reflected in reduction in the use of zinc alloys by industries such as clothing, automobiles, electronics, communications, hardware, and digital equipment. Secondly, in the second quarter of this year, exports of zinc alloy terminal products fell by about 30%~40% compared with the same period of last year, and the consumption capacity of the international market declined.
- Asian Metal: Facing the decline in demand for zinc die-casting alloys, how should companies respond to reduce losing of their own orders?
- Mr. Deng: Facing with the decline in orders, the first way our company thinks of is to develop more new customers and expand our customer base so as to increase our sales by increasing the number of customers. Secondly, in order to avoid a large amount of inventory, we will choose to reduce production appropriately. For example, cut our output to about 70% of the normal level.
- Asian Metal: Do you think the demand for zinc die-casting alloy will improve in the third quarter?
- Mr. Deng: We are not optimistic about the market demand for zinc die-casting alloy in the third quarter. In previous years, March-May was the peak season for the zinc die-casting alloy market, but this year until mid-April, the demand has not shown signs of improvement. In March of previous years, the market already witnessed large numbers of orders for molds, automobiles, and electronic products, but the demand kept weak throughout the second quarter of this year. For the epidemic, the income of residents decreased, and their consumption ability also declined. This is the main reason for the failure of peak season this year. The third quarter is the traditional off-season, so it is difficult for the overall demand for zinc die-casting alloy to improve significantly.
- Asian Metal: You are not optimistic about the demand for zinc die-casting alloy in the third quarter, and will the TC also fall?
- Mr. Deng: In the third quarter, the price of zinc ingot will keep fluctuating at a low level, and prices for zinc ingot and aluminum ingot will tend to be stable. Therefore, the production cost of zinc die-casting alloy would not change significantly, and the TC might keep stable. It is expected that the zamak-3 TC will remain at RMB300-600/t (USD41.23-82.47/t) in the third quarter.
- Asian Metal: In recent years, some low-end industries were moved out of China to Southeast Asian countries. Is this also the case in the zinc die-casting alloy industry?
- Mr. Deng: As China raises the requirements for environmental protection, high-polluting enterprises faces higher expenditures on environmental protection. The labor shortage in recent years has also directly pushed up the human resource costs for enterprises. On the contrary, Southeast Asian countries do not have high requirements for environmental protection, and the wages of workers there are much lower than those in China. Over the years, more and more companies moved their factories out of China to Southeast Asian countries. China's zinc die-casting alloy industry is mainly shifted to Vietnam, and the related markets for the materials in Vietnam have also been gradually improving.
- Asian Metal: How will your company respond to the fierce industry competition and what's your company's development direction in the future?
- Mr. Deng: In the face of fierce industry competition today caused by highly homogeneous products, we need to improve management in all respects, enhance automation level of production lines and reduce management costs and labor costs so as to improve product profitability. Meanwhile, we should strengthen quality control management, improve product quality and step up efforts in R&D to develop more high-quality products. Currently, our business covers many industries such as clothing, automobiles, electronics, communication, hardware and digital equipment. Next, we will try to make a breakthrough in our weak links, improve brand influence and make achievements in multi industries, so as to expand our customer base.
- AM: Thank you, Mr. Deng, for not only your attendance, but also the wonderful sharing. We wish Yunnan Chengliang Alloys Material more and more prosperous and take the leading position in the die-casting zinc alloy industry in the future.
- Deng: Well, I sincerely appreciate such a good communicating platform by Asian Metal, and we look forward to broader and more accurate industry information from Asian Metal.
