Recently, the zinc hypoxide coefficient has seen a slight increase. What are the reasons behind this, and what will be the future trend? An SMM survey of some zinc oxide enterprises revealed the following reasons:
Supply side, high temperatures limited downstream construction projects. Coupled with the decline in ferrous metals prices, profits of steel mills decreased, leading to more maintenance and production cuts at steel mills. The market of electric furnace ash from steel mills faced a supply shortage, making it difficult for zinc hypoxide manufacturers to maintain stable supply, causing some to reduce or halt production. As the main raw material for zinc hypoxide, the prices of electric furnace ash from steel mills also rose. The reduced market supply of zinc hypoxide and high raw material prices provided some support for the zinc hypoxide coefficient.
Demand side, there are two main aspects to consider. First, in the secondary zinc sector, according to SMM, the rise in zinc prices in August increased costs for downstream enterprises. Many considered using secondary zinc or crude zinc for production, leading to a rise in demand for crude zinc and secondary zinc, and consequently, an increase in demand for zinc hypoxide. Second, in the zinc oxide and other chemical industries, zinc oxide enterprises faced reduced operations in the all-steel tire sector and relatively stable orders for rubber-grade zinc oxide. Additionally, with rising zinc prices, more enterprises purchased zinc hypoxide as raw materials, overall increasing the demand for zinc hypoxide.
In summary, the zinc hypoxide coefficient saw a slight increase. According to SMM, steel mills still have expectations for the September-October peak season, and with cooler weather, project construction progress may accelerate, potentially boosting demand. Many steel mills have production resumption plans. If there are no significant changes in demand, a more relaxed supply of raw materials may lead to a decrease in the zinc hypoxide coefficient.
