Low-Grade Zinc Oxide Payables Caught Between Rising and Falling, High Levels Expected to Persist [SMM Analysis]

SMM News, August 17:

Prices want to rise, but downstream buyers will not take; prices want to fall, but raw materials provide support. In August, the low-grade zinc oxide market fell into a clear dilemma between upside and downside. How will it move going forward?

Price: In August, low-grade zinc oxide prices were generally caught between rising and falling. On the one hand, demand from steel mills was relatively weak. The decline in steel mill production led to reduced output of raw materials such as steel ash, and market supply remained tight. Procurement costs stayed high, providing strong support for low-grade zinc oxide prices. On the other hand, downstream demand was average, with limited acceptance of high-priced low-grade zinc oxide. Purchasing remained mainly driven by rigid demand, and enterprises’ cost pass-through to downstream was not smooth. Under the dual tug-of-war between high raw material costs and weak downstream uptake, market quotations stayed high, but further increases lacked demand support. Meanwhile, cost support was strong, leaving relatively small downside room for prices.

September outlook: Steel mill demand is expected to see limited improvement in the short term, with relatively small room for steel mill production to recover. The tight supply pattern of raw materials such as steel ash is expected to continue, and the cost side will still provide strong support for low-grade zinc oxide prices. However, downstream capacity to take high-priced raw materials is limited, and the demand side will continue to cap upside room for prices. Overall, in September, low-grade zinc oxide prices lack demand-driven momentum for a sharp rise, while declines are supported by raw material costs. Prices are expected to fluctuate at highs, and the price center is unlikely to shift down significantly.

(The above information is based on market collection and the comprehensive assessment of the SMM research team. The information provided herein is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions prudently and should not use this as a replacement for independent judgment. Any decisions made by clients are unrelated to SMM.)