Rebound in Premiums in Tianjin After Chinese New Year: What Are the Reasons? [SMM Analysis]

SMM, February 8:

According to SMM, premiums in Tianjin have gradually rebounded after the Chinese New Year. What are the reasons behind this? How will the premiums evolve in the future?

SMM provides the following analysis:

Supply side, in February, production at some northern smelters in the Tianjin region encountered minor issues, affecting part of the output. Additionally, after the Chinese New Year, transportation gradually resumed, but deliveries to Tianjin warehouses fell short of expectations. Although downstream operations have gradually resumed, the focus has been on consuming inventory, leading to relatively small demand for zinc ingots. Traders have shown a tendency to stand firm on quotes, and inventory has provided support for premiums.  

Demand side, post-holiday recovery in northern consumption still requires time in February, with most end-users resuming operations in March. In the Tianjin region, downstream zinc consumption is primarily driven by galvanising enterprises. Among them, orders for galvanized square pipes have significantly weakened due to end-user holidays, resulting in poor sales of galvanized pipes. However, the market is relatively short of supply, and with large-scale resumption of operations at galvanising plants later, demand for zinc ingots is expected to increase. Under slightly tight spot conditions, premiums in Tianjin are expected to continue rebounding.  

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