Inventory Buildup Levels Were Low During the Chinese New Year Week: What Are the Reasons Behind This? [SMM Analysis]

SMM February 8 News:    

      At the beginning of the new year, according to SMM data, zinc ingot inventory buildup during the Chinese New Year week increased by 36,600 mt to 107,000 mt. The absolute inventory level remains at a relatively low level over the past five years, while the inventory buildup has hit an eight-year low. What are the reasons behind this?

       Firstly, from the supply perspective. In 2025, domestic smelters have mostly completed signing long-term contracts for zinc ingots. In recent years, smelters in various regions have shown a preference for the factory pickup model in long-term contracts, with an increasing proportion of factory pickup. Against this backdrop, although domestic zinc ingot production by smelters in January has basically returned to normal levels of recent years due to rising domestic and international TC, the decline in the volume of zinc ingots delivered to warehouses under long-term contracts, and even the adoption of the factory pickup model for some spot orders by smelters, have impacted the volume of zinc ingots delivered to various domestic regions during the Chinese New Year.

       Secondly, from the transportation perspective. According to SMM, during this Chinese New Year holiday, the shipment of zinc ingots from some smelters was delayed. Currently, a certain quantity of zinc ingots from domestic smelters is in transit. Based on partial data, the in-transit volume may exceed 20,000 mt. With the recovery of logistics, these zinc ingots are expected to arrive gradually next week, contributing to a continued inventory buildup in domestic zinc ingot social warehouses.

       In summary, the increase in the factory pickup proportion, combined with the impact of logistics and transportation, resulted in a zinc ingot inventory buildup during this year's Chinese New Year week that fell short of market expectations. Continuous attention is needed on the arrival of zinc ingots in the next two weeks.

For SMM Lead and Zinc Industry Data Package, please contact: Penghui Tang

Phone: 15008461791