From the Supply-Demand Pattern Perspective, 2025 Zinc Ingot Long-Term Contract Prices [SMM Analysis]

SMM, December 20:

As the transition between the old and new year approaches, the execution of 2025 long-term contracts is expected to commence. The market is paying close attention to the signing of long-term contracts by zinc smelters for next year. SMM has compiled the 2025 long-term contract price information for some enterprises as follows:

From the signing situation of enterprises, the 2025 long-term contract prices are significantly higher than last year, especially the ex-works long-term contract prices, which overall increased by 10-80 yuan/mt. The main reason is that, based on the annual average spot premium of 32 yuan/mt in 2024 reported by SMM, the ex-works long-term contract prices signed by traders, after deducting freight costs, generally offer a certain profit margin. Traders are actively signing ex-works prices, and smelters also see profit potential. Therefore, the annual long-term contract prices for next year have been adjusted upward to varying degrees.

From the perspective of next year's supply and demand structure, as the issue of ore shortages gradually eases, the previously reduced capacity and new capacity of smelters will be gradually released. SMM roughly estimates that the production of smelters in 2025 may increase by over 200,000 mt YoY, and the supply-side shortage issue will gradually be alleviated. On the consumption side, domestic favourable macro policies continue, with loose fiscal and monetary policies already set. Meanwhile, under the "stabilizing the real estate market" policy, the real estate sector has stopped declining and stabilized. As a major consumption sector for zinc, attention should be paid to the actual release of infrastructure projects. If the consumption growth rate can match the supply increase, the overall pressure on the spot market will be moderate. Otherwise, the likelihood of spot cargo being transferred to delivery warehouses will increase significantly.

(The above information is based on market collection and comprehensive evaluation by the SMM research team. The information provided in this article is for reference only and does not constitute direct investment research advice. Clients should make cautious decisions and not replace independent judgment with this information. Any decisions made by clients are unrelated to SMM.)

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