Recent Increase in Low-Grade Zinc Oxide Coefficient: What Are the Reasons? [SMM Analysis]

SMM, December 26:

Recently, the coefficient of low-grade zinc oxide has risen slightly. What are the reasons behind this, and what will be the future trend? An SMM survey of some low-grade zinc oxide enterprises revealed the following key factors:   

Supply side, in December, colder weather limited downstream construction projects. Coupled with declining ferrous metals prices, reduced steel mill profits, and lower steel mill production, the steel ash market faced undersupply, making it difficult for low-grade zinc oxide manufacturers to maintain stable supply. This led some manufacturers to reduce or halt production. Additionally, as the primary raw material for low-grade zinc oxide, steel ash prices also rose significantly. The reduced market supply of low-grade zinc oxide and high raw material costs provided certain support for the coefficient of low-grade zinc oxide.

Demand side, according to SMM, due to the continued high fluctuation of zinc prices in December, downstream enterprises faced increased costs. Many enterprises considered using other zinc-containing scrap for production, leading to a decline in demand for crude zinc and recycled zinc. However, this was not enough to change the undersupply situation of low-grade zinc oxide.

In summary, the coefficient of low-grade zinc oxide rose slightly. According to SMM, the price of low-grade zinc oxide has reached a relatively high level. Moving forward, downstream enterprises may not accept further price increases, and with many recycled zinc enterprises taking the Chinese New Year break in January, demand for low-grade zinc oxide is expected to decline further. It is anticipated that the price of low-grade zinc oxide will likely remain stable.

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