Tianjin Zinc Ingot Premiums and Discounts Have Consistently Traded at a Discount—What Lies Ahead? [SMM Analysis]

SMM News, November 11: In November, premiums and discounts in the Tianjin area continued to remain low, and the zinc ingot market in Tianjin remained sluggish. How will premiums and discounts perform going forward?

Supply side, major brand smelters in Tianjin largely resumed normal production in October. Entering November, output from smelters in north China continued to increase slightly but remained generally flat compared with October. According to SMM, with the export window remaining open, brands like Hongye and Zijin dominated zinc ingot exports from Tianjin. Market purchases were relatively active, leading to tight supply. Currently, overall exports remain relatively small as traders await more favorable opportunities. Other brands maintained normal operations, exerting limited impact on overall inventory. Zinc ingot inventory in Tianjin remains high, persistently suppressing the rise in premiums.

From the consumption side, zinc downstream activities in Tianjin primarily centered on galvanizing enterprises. Starting in November, environmental protection issues became more prominent, with frequent environmental protection warnings leading to significant production restrictions among downstream enterprises and limitations on vehicle transportation. Environmental impacts were expected to continue after the start of the heating season. As November marked the tail end of the peak season, construction in the real estate sector gradually pulled back. In infrastructure, due to funding pressures on projects, orders for steel towers from project owners decreased. However, as 2025 is the final year of the "14th Five-Year Plan," many projects rushed to meet deadlines, and orders in sectors like transportation remained relatively robust. Overall, consumption still showed resilience, but the upward shift in the zinc price center led downstream enterprises to focus on just-in-time procurement, avoiding large-scale stockpiling, resulting in a slight weakening of zinc ingot demand.

Overall, the Tianjin market remains in an oversupply situation. However, SHFE zinc has already absorbed negative factors and is no longer a short-selling target. Zinc prices continue to fluctuate at highs, and traders are still waiting for export opportunities. Downstream consumption shows no significant highlights. Under the oversupply pattern, Tianjin premiums and discounts are expected to remain weak.