SMM, August 25:
In August, the Tianjin zinc ingot market continued to face ample supply and weak demand. Market circulation remained well supplied, while downstream purchasing activity was moderate, with transactions mainly driven by rigid demand. Traders continued to offer zinc ingots at discounts to facilitate sales, and regional supply-demand imbalances remained evident.
On the supply side, production at northern zinc smelters remained relatively stable in August, while zinc ingot availability in Tianjin was sufficient and social inventories remained relatively high. Although exports contributed to some destocking, the volume of zinc ingots circulating in Tianjin remained relatively large. Traders were therefore more willing to sell, resulting in intense competition in the spot market and continued deep discounts.
On the demand side, downstream consumption showed limited improvement in August. Orders at galvanizing plants in Tianjin remained generally weak. Combined with sluggish end-user demand and the impact of high temperatures, plant operating rates and purchasing activity remained subdued. Raw material procurement was mainly based on immediate needs, with limited willingness to actively restock.
Looking ahead to September, as the traditional peak consumption season approaches, downstream demand is expected to improve from August. Operating rates and zinc consumption at galvanizing plants may recover marginally, potentially supporting spot transactions. However, given that supply remains relatively ample, inventories will take time to decline, while zinc prices remain at relatively high levels. Therefore, the fundamentals for a significant recovery in the spot premium/discount remain limited.
Overall, the supply-demand imbalance in the Tianjin zinc ingot market may ease somewhat in September, but supply pressure is expected to persist. Spot zinc ingot is likely to remain at a discount, although the scope for the discount to widen further may narrow. Market attention should focus on the recovery in downstream demand and developments in zinc ingot exports.
