Zinc Ingot Premiums and Discounts in Tianjin Remain Weak; How Will They Move Next? [SMM Analysis]

SMM October 27 News: Throughout October, premiums and discounts in the Tianjin area remained low, and the zinc ingot market in Tianjin performed sluggishly. How will premiums and discounts move going forward?

Supply side, major smelters in Tianjin underwent maintenance and production cuts in September, but most resumed operations by October. Production of mainstream zinc ingots in Tianjin remained high. However, the export window opened frequently in October, and some smelters and traders plan to export. According to SMM, overall exports are relatively small, with some traders conducting small-scale trial exports, which have little impact on overall inventory. Tianjin's zinc ingot inventory continues to rise. High inventory levels in Tianjin have consistently suppressed the rise in premiums.

From the consumption side, zinc downstream in the Tianjin area is mainly concentrated in galvanising enterprises. After the National Day holiday, production resumptions fell short of market expectations, with overall downstream demand remaining weak and operating conditions less than ideal. In particular, ferrous metals prices continued to fluctuate at lows, leading to poor sales of galvanized pipes, which in turn dampened production enthusiasm among pipe factories, resulting in actual operating rates being lower than expected. Meanwhile, zinc prices rebounded in October, but enterprise purchasing sentiment remained weak, with most restocking based on rigid demand or focusing on digesting inventories. In terms of structural components, orders for steel towers saw a slight pullback, while demand for products such as guardrails, lamp rods, and PV mounting brackets improved. Small enterprises, facing funding pressures and order uncertainties, tended to adopt a purchasing-as-needed strategy and reduce zinc ingot inventories. Overall, procurement demand in the Tianjin market showed no significant improvement, and zinc ingot demand weakened.

Overall, the Tianjin market remains in an oversupply situation, while SHFE zinc maintains a contango structure. Due to sluggish sales, many smelters and traders have delivery plans, but consumption performance remains relatively weak. With new long-term contracts already starting and futures fluctuating at highs, enterprises are mainly focused on rigid demand. Under persistent oversupply conditions, Tianjin premiums and discounts are expected to continue performing poorly.