What Are the Expansion Plans for Low-Grade Zinc Oxide and Zinc Calcine in 2025? [SMM Analysis]

In 2024, due to the impact of extreme weather and declining raw ore grades, the imbalance at the mining end has intensified. Many smelters have seen an increase in demand for low-grade zinc oxide and zinc calcine, leading to significant price increases for these materials within the year. What are the capacity plans for low-grade zinc oxide and zinc calcine enterprises for next year?

According to SMM, the profitability of low-grade zinc oxide enterprises has been relatively good this year, and many companies are considering increasing production. However, in recent years, due to the "capacity reduction" in the steel industry and the relatively weak real estate sector, China's steel production has remained stable without significant growth. Affected by the continued contraction in the real estate sector, the low level of new real estate construction has kept steel demand weak. Steel mill profits are under pressure, and the supply of steel ash raw materials is tight. Most low-grade zinc oxide enterprises are still concerned about the tight supply of raw materials and are temporarily maintaining the status quo.

Similarly, zinc calcine enterprises are also troubled by raw material shortages. Moreover, the downstream applications of zinc calcine are more limited compared to low-grade zinc oxide. Most zinc calcine enterprises have no plans for capacity expansion. However, many companies are considering extending their industry chain by adding recycled zinc production lines.

The relatively weak state of the real estate sector in 2025 may not improve. However, with the release of favorable national policies, infrastructure projects may serve as a stabilizing factor. According to SMM estimates, steel mill production in 2025 is expected to increase slightly, but this will provide limited relief for the tight supply of recycled zinc raw materials. Coupled with the expected easing of tightness at the mining end next year, the demand for low-grade zinc oxide and zinc calcine may decline. With increased capacity, cut-throat competition among enterprises may intensify.