Low-Grade Zinc Oxide and Zinc Calcine Prices Hold Steady: What Is the Subsequent Price Trend? [SMM Analysis]

SMM September 26 News: After the August price increase, low-grade zinc oxide and zinc calcine prices have stabilized. What will be the subsequent price trend?

From the raw material perspective, the operating rate of blast furnaces saw a slight rebound after the military parade, but it has continued to decline in recent years. The production of blast furnace dust has decreased significantly. Additionally, environmental protection regulations require steel mills to keep hazardous and solid waste on-site, prompting some enterprises to prepare for expanding their own rotary kiln or rotary hearth furnace production lines. They are stockpiling raw materials instead of selling them, which has increased the difficulty of purchasing raw materials. This year, the supply of steel dust raw materials has remained tight, with no signs of easing in the short term, providing support for the prices of low-grade zinc oxide and zinc calcine.

Supply side, amid tight raw material availability, some enterprises suspended production to stockpile materials, leading to a decline in low-grade zinc oxide production. Additionally, zinc prices continued to pull back in September, resulting in unfavorable profits for low-grade zinc oxide enterprises, some of which became reluctant to sell. The coefficient for low-grade zinc oxide remained high. Internationally, the SHFE/LME price ratio was unfavorable this year, reducing import profits for low-grade zinc oxide and leading to fewer imports. Some Southeast Asian enterprises shifted sales to regions such as the Middle East and the US. Overall, the supply of low-grade zinc oxide remained limited throughout the year, with high-grade, quality low-grade zinc oxide being particularly scarce. For zinc calcine enterprises, the overall scarcity of low-grade zinc oxide affected raw material procurement, causing some zinc calcine producers to suspend operations due to material shortages. Overall zinc calcine production also decreased YoY. Moreover, many zinc calcine enterprises extended their industry chain by adding electrolysis zinc production lines, with most output used in-house, leaving limited zinc calcine available in the market.

Demand side, due to changes in zinc oxide raw materials this year, overall demand for crude zinc has been strong. Many enterprises have consequently increased their crude zinc capacity. Most crude zinc producers primarily use low-grade zinc oxide or zinc calcine as raw materials, leading to a significant rise in demand for low-grade zinc oxide and further exacerbating its undersupply in the domestic market.

However, with the increase in low-grade zinc oxide prices, many crude zinc producers have raised their product selling prices, but downstream customers have shown limited acceptance of these price hikes. This has made it difficult for crude zinc producers to bear the continuously rising costs of low-grade zinc oxide and zinc calcine, thereby somewhat restraining further price increases for these raw materials.

As for the zinc calcine market, due to relatively ample zinc concentrate supply this year and attractive profits from by-products such as sulphuric acid and minor metals, many smelters prefer to directly purchase raw ore for production, reducing demand for zinc calcine. This shift has made it challenging for zinc calcine prices to rise.

With the National Day holiday approaching, most producers of low-grade zinc oxide and zinc calcine have no plans for shutdowns. However, logistics may be affected during the holiday period. In response, most smelters and secondary zinc enterprises have already built up sufficient inventory in advance, so demand for low-grade zinc oxide and zinc calcine is expected to experience a slight decline. Nevertheless, given the ongoing tight supply of low-grade zinc oxide in the market, prices for these two products are forecast to remain stable in the short term, with no significant fluctuations anticipated.