Domestic and Imported Zinc Concentrate TCs Both Decline: What Happened in the Zinc concentrate Market?[SMM analysis]

SMM October 30 News:

As of October 24, the SMM domestic zinc concentrate TC recorded 3,250 yuan/mt in metal content, while the imported zinc concentrate TC dropped to $110.25/dmt. Why did both domestic and imported TCs start to decline, with the domestic TC turning lower since September and the imported TC recently falling from high levels？

First, looking at domestic TCs. On one hand, as Q4 begins, some smelters started winter stockpiling, and with existing production profits, smelters are actively operating, leading to robust demand for zinc concentrate domestically. On the other hand, since Q3, losses on imported zinc concentrate have gradually widened in China. According to SMM calculations, after entering October, imported zinc concentrate was already more than 2,000 yuan/mt expensive than domestic zinc concentrate. For profitability reasons, smelters prefer purchasing domestic zinc concentrate, further intensifying demand for domestic zinc concentrate. Additionally, Q4 is the traditional production-halting season for domestic zinc mines, and some mines, having completed annual plans, choose to control or cut production in Q4. Under these multiple factors, domestic zinc concentrate supply weakened QoQ in Q4. With supply decreasing and demand increasing, domestic zinc concentrate TCs fell significantly in October.

Turning to imported zinc concentrate. After the National Day holiday, as domestic zinc concentrate TCs declined noticeably, traders of imported zinc concentrate also lowered their offers. According to SMM, recent offers in the imported zinc concentrate market showed significant divergence, with general imported zinc concentrate offers falling to $80-110/dmt. Moreover, with rising zinc prices and previous increases in imported zinc TCs, overseas smelters show willingness to restore production, which may, in the long run, impact the inflow of imported zinc concentrate and exert downward pressure on imported zinc concentrate TCs.

In summary, winter stockpiling season and substantial losses on imported zinc concentrate jointly drove the sharp decline in domestic zinc concentrate TCs in October. This trend is expected to continue in November. Furthermore, although smelter interest in purchasing imported zinc concentrate remains low currently, if domestic zinc concentrate supply continues to be tight, there is still potential for further declines in imported zinc concentrate TCs in the future.

(The above information is based on market collection and comprehensive evaluation 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 and decision-making. Customers should make cautious decisions and should not replace their independent judgment with this information. Any decisions made by customers are not related to SMM.)