Zinc Ingots in Tianjin Consistently Traded at a Large Discount — What Are the Reasons? [SMM Analysis]

SMM April 15

Premiums in the Tianjin region have consistently remained at a discount. How will premiums trend going forward?

Supply side, major brand smelters in the Tianjin region were largely operating normally in April. Although minor routine maintenance had some impact, some smelters were still steadily increasing production, and overall zinc ingot production remained relatively stable. Under normal shipping conditions, Tianjin inventory increased notably. Delivery warehouse capacity was essentially full, and some traders were eager to ship out and collect payments, pushing shipment premiums continuously lower. Zinc ingots in Tianjin continued to trade at significant discounts.

Consumption side, downstream zinc consumers in the Tianjin region were mainly concentrated in galvanizing enterprises. Starting in April, peak season consumption began to materialize, and overall consumption improved compared to March. However, elevated zinc prices suppressed downstream purchases. Combined with product adjustments at major galvanizing enterprises, zinc consumption declined, slowing the pace of zinc ingot absorption. Spot trading was not active, Tianjin continued to see inventory buildup, and the Tianjin region remained at a discount.

Looking ahead, overall consumption performance was moderate but lacked highlights. Downstream operating rates were expected to remain at current levels, while smelters' willingness to produce remained relatively high, and zinc ingot supply still leaned toward surplus. If the export window opens going forward, absorbing zinc ingot inventory, Tianjin premiums will edge up, but the overall upside will be limited.