SMM June 12 News:
As Q2 draws to a close, how has the overall consumption of zinc oxide been recently? This article will analyze the situation based on changes in operating rates and the demand performance of various downstream sectors.
Firstly, data indicates that the operating rates of zinc oxide enterprises in China were lower in April and May compared to the same period last year. What are the reasons behind this? Below are the specifics for each sector.
I. Review of Zinc Oxide Consumption in Q2: Significant Differentiation Across Sectors
(I) Rubber-Grade Zinc Oxide: Demand Under Pressure, Exports Hindered
Recently, the dual pressures of high inventory levels and slower outflows from warehouses at terminal tyre factories have directly led to a significant decline in their procurement demand for zinc oxide. In addition, the continuous deterioration of the international trade environment has further exacerbated the weak demand: the reciprocal tariff policy implemented since April, the anti-dumping investigation initiated by the EU in May, and the tense international situation in some regions have caused a sharp drop in orders for tyre export enterprises with the US and the Middle East as their main markets, thereby significantly weakening tyre factories' purchase willingness for zinc oxide. However, the demand for rubber-grade zinc oxide in the chemical industry has remained relatively stable, which has, to some extent, cushioned the overall decline in demand.
(II) Ceramic-Grade and Feed-Grade Zinc Oxide: Differentiated Demand Performance
The ceramic-grade zinc oxide market shows a differentiated pattern: some enterprises report that demand this year is significantly better than the same period last year, while others believe that market demand has remained stable. The feed-grade zinc oxide market has also performed well. Recently, the severe outbreak of African swine fever in overseas regions has provided certain support for China's pork exports, driving up the demand for feed-grade zinc oxide against the traditional off-season trend, exhibiting the characteristic of "stronger-than-usual off-season." However, some enterprises have also reported that due to the weakening demand from domestic small and medium-sized enterprises, feed orders have been relatively average.
(III) Electronic-Grade Zinc Oxide: Mixed Demand Performance
In 2025, the State Grid Corporation of China's investment exceeded 650 billion yuan for the first time, accelerating the progress of power infrastructure projects in North and Central China, strongly supporting the demand for electronic-grade zinc oxide. However, the demand performance in the home appliance sector is not optimistic. Data shows that in April, the cumulative YoY changes in China's household refrigerators, household air conditioners, and household washing machines were -0.7%, 2.6%, and 10.9%, respectively, which has slightly slowed down the demand for electronic-grade zinc oxide used in varistors.
II. Risks and Outlook for Subsequent Zinc Oxide Demand: Cautious Sentiment Rising(I) High Uncertainty in International Trade Risks
The impacts of factors such as reciprocal tariffs, anti-dumping investigations, and geopolitical conflicts are unlikely to be effectively alleviated in the short term. This will continue to suppress the demand for zinc oxide from tire export-oriented enterprises, thereby affecting the overall market performance.
(II) Combined Impact of Environmental Protection and Climatic Factors
In some regions, environmental protection checks have led to production restrictions and cuts in zinc oxide enterprises, limiting the release of production capacity. Meanwhile, as summer approaches, high temperatures are expected to pose certain obstacles to the production of zinc oxide enterprises and some end-use demand, resulting in dual pressure on both supply and demand.
(III) Profit Compression and Pessimistic Market Expectations
Currently, the zinc oxide market is experiencing intense low-price competition, coupled with high raw material prices, continuously narrowing the profit margins of enterprises. Faced with the arrival of the off-season, most enterprises are cautious about future market demand. It is expected that the overall operating rate of zinc oxide will continue to decline, and market activity will also decrease accordingly.
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