What are the reasons for the increase in the coefficient of low-grade zinc oxide? [SMM Analysis]

SMM May 23 News:

What are the reasons behind the recent price increase of low-grade zinc oxide? How will it fare in the future?

From the raw material supply side, orders from the automotive and home appliance sectors remained robust in April and May, while demand from the real estate and infrastructure sectors was weak. Overall, steel mill orders were average. However, with moderate overall profits for steel mills, their production willingness was high, and the production of steel ash did not decrease. But as the recycling capacity of steel plants increased, the zinc grade of steel ash declined. Additionally, starting from April, stricter standards were implemented for steel ash recycling and emissions, leading to increased difficulty in purchasing raw materials. The steel ash market faced an undersupply, making it difficult for low-grade zinc oxide manufacturers to maintain a stable supply. Some low-grade zinc oxide enterprises halted production to accumulate raw materials starting from the Chinese New Year and only resumed production in May. The price of steel ash remained at a relatively high level, contributing to the price increase of low-grade zinc oxide.

 From the demand side, according to SMM, after the Chinese New Year, zinc concentrate TCs continued to rise, and the supply of zinc ore gradually loosened. With sufficient raw materials for smelters, the demand for low-grade zinc oxide decreased. However, due to the persistently high price of zinc slag, some zinc oxide enterprises purchased crude zinc as a raw material. The overall sales of crude zinc were good, and the demand for low-grade zinc oxide from secondary zinc enterprises increased, providing support for the price of low-grade zinc oxide.

 Looking ahead, the shortage of raw materials may not be alleviated temporarily, and with the arrival of the off-season in the downstream market, demand may weaken. The price of low-grade zinc oxide may stabilize in the future.

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

                                                                                          》Click to view the SMM Metal Industry Chain Database