Guangdong zinc premiums drop after rollover. What's the outlook?

Under the current fundamental setup, how will premiums and discounts in the Guangdong market develop in the near term?
Supply side, according to SMM data, as of February 27, zinc ingot inventory in Guangdong continued to increase to 33,000 mt, rising further from the first working day after the holiday and hitting a three-year high for the same period. Recent inventory buildup pressure in Guangdong has been particularly noticeable. Although many suppliers made shipments after the holiday, the spot market exhibited an oversupply pattern in the short term.

From the demand side, the operating rate for die-casting zinc alloy this week was recorded at 8.73%. End-use demand for various zinc sectors, including die-casting zinc alloy and galvanizing in Guangdong, still exhibited certain off-season characteristics, with most hardware accessory factories remaining idle. Meanwhile, SMM learned from feedback with enterprises and traders that the resumption of work at Guangdong alloy plants and downstream hardware and accessory enterprises was mainly concentrated at two time points: around the tenth day of the Chinese New Year or after the Lantern Festival for full production. However, as hardware factories are still in the final stage of the Chinese New Year holiday, overall purchasing enthusiasm in the market remained low, significantly hindering trading activity in the Guangdong spot market. It is expected that consumption in the Guangdong market will take another one to two weeks to fully revive.

Overall, the core contradiction in Guangdong zinc ingot premiums and discounts after the Chinese New Year lies in the interplay between post-holiday inventory buildup pressure and the recovery pace of end-users, with the overall trend expected to be characterized by short-term pressure and a gradual recovery in the long run.