SMM

Recently, the Association of Furniture and Woodworking Industry Enterprises of Russia (AMDPR) officially announced that Vladivostok Customs in Russia has started classifying furniture slide accessories with circular or rotating elements as bearing categories. The tariffs on such product accessories will be significantly increased from 0% to 55.65%. Most of the furniture accessories exported from China to Russia need to pass through this customs. Additionally, some of these furniture accessories are made of die-cast zinc alloy, such as sliding door pulleys and slide rail accessories.

This year, both the depreciation of the yuan in Q2 and the demand from overseas markets have led to an increase in the export volume of China's die-cast zinc alloy products. In 2024, furniture accessories exported from China to Russia are expected to account for only about 5% of China's total exports, including die-cast zinc alloy furniture slide accessories. Compared to the same period last year, the total order volume exported to Russia this year has decreased by approximately 3%. According to SMM, many die-cast zinc alloy end factories in South China export such furniture accessories to Russia. The tariff hike will undoubtedly add to the difficulties for China's die-cast zinc alloy enterprises exporting to Western countries, significantly affecting the enterprises' production plans and capacity utilisation rate.

From the current risk points, the factors affecting China's export of die-cast zinc alloy products to Russia mainly include two aspects:

Firstly, the aforementioned tariff hike;

Secondly, the issue of payment difficulties reported by die-cast zinc alloy manufacturers in Russia. In 2023, during the meeting between the leaders of China and Russia held in Moscow, Russian President Vladimir Putin expressed support for Russia to switch to using the yuan in trade settlements with Asian countries. According to data from the Central Bank of Russia, from 2021 to year-end 2023, the proportion of the yuan in Russia's export trade settlements increased from 0.4% to 34.5%. The proportion of the yuan in Russia's import trade settlements increased from 4.3% to 36.4%. Although the proportion of using the yuan in trade settlements between the two countries has been increasing, the issue of payment difficulties still exists due to disagreements over the settlement currency between Chinese and Russian enterprises. According to SMM, Russian enterprises still prefer to use the ruble for settlements, while Chinese enterprises prefer to use the yuan, making payment collection difficult. Additionally, the local conflict between Russia and Ukraine has exacerbated the payment difficulties for die-cast zinc alloy end manufacturers.

In summary, if the subsequent tariff imposition is implemented and enterprises cannot overcome the payment difficulties, it will have a strong impact on China's die-cast zinc alloy enterprises exporting to Russia. However, overall, the export of furniture accessories to Russia accounts for only a relatively small portion of China's exports of such products, and the subsequent export situation of die-cast zinc alloy parts is expected to be relatively small.