Zinc prices to rise in the near term with tight supply of zinc ore through Q4

SHANGHAI, Sep 23 (SMM) — Some smelters are worried about the ore supply in Q4 recently. The winter stockpiling time is advanced with more demand of smelters in the near term, leading to the tight supply of zinc concentrate and the decrease of treatment charges (TC) of domestic zinc concentrate to some extent.

Treatment charges of domestic zinc concentrate stood at 5,300 yuan/metal mt as of September 18, 200 yuan/mt lower than that of September 11. Treatment charges of imported ore has been declining since August, indicating that the supply of zinc ore overseas is also tight, and it is expected that there will still be support on the supply side.

On the smelting end, the smelters’ production enthusiasm increased due to high profits, mainly to increase production and resume production, and the refined zinc output kept climbing. SMM estimated that the refined zinc output will increase 36,900 mt to 545,900 mt month on month, with an increase of 30,200 mt from the previous year.

On the consumption side, zinc prices were at a low level before the National Day holidays with high downstream demand, while the support for downstream consumption still exists. In terms of galvanization, the overall consumption remained stable, for example, orders of Jiangsu enterprises in Indonesian market have increased slightly. As for die-casting zinc alloy, the overall orders increased steadily, and it is expected that overseas orders will increase at the end of the month. As for zinc oxide, the tire part is the main support, and it is expected that zinc oxide operating rates will remain high in the near term.

The tight supply of ore became the main concern in Q4. Combined with the decrease in zinc prices before the National Day holidays and high demand for downstream restocking, the consumption still supported zinc prices, and zinc prices were still amid bullish sentiment in the near term.