Zinc Oxide Market Sees Off-Season Demand Slump, Production Cuts and Maintenance Impact Operations

As of July 28, LME zinc inventories (including off-warrant stocks) had fallen to 119,600 mt, down by approximately 45,000 mt from mid-June. As overseas inventories continued to decline, the LME zinc market structure shifted from contango to backwardation, with the backwardation widening further. By July 28, the LME zinc cash-to-3M spread had strengthened to US$61.09/mt.

[Zinc Ingot Export Window Opening? A Nearly 20-Year Rare Opportunity Reemerges!] As of July 28, LME zinc inventory (including non-registered warrants) had pulled back to 101,800 mt, down about 20,000 mt from mid-June. Amid continued destocking outside China, the LME zinc market structure shifted from contango to backwardation, and the backwardation structure kept widening. On July 28, the LME zinc Cash-3M spread strengthened to $61.09/mt. In stark contrast, zinc consumption in China remained in the traditional off-season, with SMM-reported social inventory of zinc ingots across seven domestic markets holding steady at a high level of around 260,000 mt. The supply-demand patterns in China and overseas clearly diverged, and the SHFE/LME zinc price ratio weakened all the way. Against this backdrop, the long-dormant export window for Chinese zinc ingots reappeared, and discussions in the market about reverse arbitrage involving "buying SHFE zinc, selling LME zinc" noticeably heated up...

【SMM Flash】It is learned that zinc prices keep fluctuating at high levels, while end-user consumption remains sluggish. Against this backdrop, die-casting zinc alloy enterprises hold a price-aversion stance and conduct cautious purchasing. Most opt to draw down in-house inventories or utilize delivered long contracts, showing generally low buying interest. In addition, some inventories fixed via forward pricing by market participants have not yet been lifted, and overall demand stays weak.