Zinc Slag Payables Edge Down, How Will They Move Going Forward? [SMM Analysis]

SMM, May 22:

According to SMM, zinc slag payables pulled back slightly but remained at highs seen in recent years. What were the reasons? How will they trend going forward?

SMM's analysis identified the following key reasons:

End-use consumption weakened. Galvanizing enterprise operating rates declined in May and were weaker YoY. Amid weakening demand, a polarization emerged between large and small producers in terms of operating rates. Overall zinc slag production was not high, and due to fewer orders, it was difficult for processing fees to rise. Galvanizing plants had limited room to offer concessions, and payables remained relatively firm.

Zinc price trends exerted some pressure on zinc slag payables. Zinc prices continued to rise in May, and galvanizing plants' willingness to sell increased. Some galvanising enterprises still had a mentality to hold prices firm when selling, but overall zinc oxide enterprise operating rates weakened slightly in May. Additionally, zinc oxide enterprises substituted crude zinc for zinc slag, and demand for zinc slag weakened slightly. Transactions at high prices were difficult, and zinc slag payables pulled back slightly.

Looking ahead, under the impact of invoicing issues and declining galvanizing plant operating rates, zinc slag supply remains relatively tight. With both supply and demand weak, based on current galvanizing enterprise operating rates and future expectations, there is limited room for payables to be adjusted downward.