Zinc Calcine Prices Rose While Low-Grade Zinc Oxide Remained Stable: What Is the Subsequent Trend? [SMM Analysis]

The price of low-grade zinc oxide stabilized after rising in September, while the price of zinc calcine continued to increase in October. What will be the subsequent price trend?

From the raw material perspective, over the past two years, due to declining profits, many steel mills considered cost reduction and efficiency improvement by using dust ash to replace part of iron ore concentrates in production. The resulting secondary dust ash had relatively low zinc content and calorific value, reducing the available raw materials for low-grade zinc oxide enterprises. Starting in November, most northern regions began heating, which may impose certain environmental protection requirements. The raw material situation is expected to remain tight going forward.

Supply side, the tight supply of raw materials impacted enterprise production, leading to a decline in low-grade zinc oxide output. In October, zinc prices remained low, resulting in unfavorable profits for low-grade zinc oxide enterprises, with some holding back sales. The low-grade zinc oxide payables stayed high. Internationally, the SHFE/LME price ratio was poor this year, reducing import profits for low-grade zinc oxide and leading to fewer imports. Overall, the supply of low-grade zinc oxide was limited throughout the year, and high-grade, quality low-grade zinc oxide was particularly scarce. For zinc calcine enterprises, the overall scarcity of low-grade zinc oxide affected raw material purchases, with some zinc calcine producers halting production due to material shortages. Overall zinc calcine production also decreased YoY. Additionally, many zinc calcine enterprises extended their industry chain by adding electrolysis zinc production lines, mostly for internal use, resulting in limited market availability of zinc calcine.

Demand side, the shift in raw materials for zinc oxide this year has led to robust demand for crude zinc overall. However, with the rise in low-grade zinc oxide prices, many crude zinc producers have increased their product selling prices, though downstream customers have shown low acceptance of these 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 curbing further increases in the prices of these raw materials to some extent.

Zinc calcine market, the sharp price increase of low-grade zinc oxide has forced zinc calcine enterprises to raise prices. High costs have resulted in poor profitability for zinc calcine, yet the pace of price hikes has failed to keep up with that of low-grade zinc oxide. Coupled with limited demand from smelters for zinc calcine, its price continues to rise slowly.
In November, the price of low-grade zinc oxide is expected to remain high, while the price of zinc calcine may continue to increase slightly.