November Zinc Slag Coefficient Declines, and May Continue to Drop in December [SMM Analysis]

According to SMM, the overall zinc slag coefficient in November experienced a decline. What are the reasons behind this? How will it develop in the future? SMM's analysis identifies the following key reasons:

Firstly, the operating performance of downstream zinc oxide enterprises in November was average. Zinc oxide is mainly consumed in tires, and the operating rate of semi-steel tires declined. The operating rate of zinc oxide also decreased, weaker than the same period in 2023. The demand for zinc slag from zinc oxide enterprises weakened, coupled with zinc prices reaching an annual high, leading to reduced purchases by zinc oxide enterprises, which exerted some pressure on the zinc slag coefficient.

Secondly, the operating rate of galvanising enterprises improved in November, resulting in an increase in zinc slag production. Additionally, the prices of ferrous metals rebounded, improving enterprise profits. With better orders in November, galvanising plants were also willing to offer some concessions, causing a slight decline in the coefficient.

Thirdly, the trend of zinc prices exerted some pressure on the zinc slag coefficient. In November, zinc prices surged to an annual high, showing strong performance. As zinc prices rose, the zinc slag coefficient sold by galvanising enterprises slightly declined.

Zinc slag coefficient (%)

Overall, with zinc prices continuing to fluctuate at high levels, the zinc slag coefficient has stabilized under current conditions. Given the current operating rate of galvanising enterprises and future expectations, there may be a downward adjustment in the coefficient.