According to China Nonferrous Metals News, zinc prices have gradually shifted upward since late October. Positive shifts in the supply side have spurred intense buying of domestic ore by smelters, tightening zinc ore supply margins. Simultaneously, firm overseas zinc prices have provided additional support.

Marginal Tightening in Zinc Ore Supply

The International Lead and Zinc Study Group (ILZSG) reported that global zinc ore production reached 1.0976 million tons in August, marking a 2.2% month-on-month increase and a 13.1% year-on-year rise. Cumulative production from January to August totaled 8.305 million tons, up 6.5% year-on-year. For October, the organization projects global zinc ore production to reach 12.51 million tons, a 4.6% year-on-year increase. From a global perspective, zinc ore supply remains generally ample.

In October, China's domestic zinc concentrate output reached 330,800 metric tons, rebounding by approximately 16,000 metric tons from September and rising 12.3% year-on-year. Cumulative production from January to October totaled 3.058 million metric tons, marking a 2.4% year-on-year decline. In the short term, China's zinc ore supply shows a clear tightening trend, with processing fees rapidly declining. Data indicates that as of last week, domestic zinc ore processing fees had fallen to 2,600 yuan per metric ton of metal, down 1,300 yuan from August's peak. With the domestic-to-international zinc ore price ratio remaining persistently low, smelters are actively stockpiling domestic ore.

Refined Zinc Output May See Slight Decline

Internationally, global refined zinc production reached 1.227 million metric tons in August, up 17,000 metric tons month-on-month, resulting in a monthly surplus of 47,900 metric tons. From January to August, cumulative production totaled 9.152 million metric tons, with a surplus of 154,000 metric tons, compared to a surplus of 138,000 metric tons during the same period last year.

Domestically in China, industry statistics indicate October refined zinc output reached 617,200 metric tons, up approximately 21% year-on-year. Cumulative production from January to October totaled 5.686 million metric tons, a 10% increase year-on-year. Entering November, zinc ore supply constraints have intensified. Facing profit pressures, some smelters may reduce output. However, with byproduct sulfuric acid prices remaining elevated, most smelters are employing technical measures to enhance overall profitability, suggesting production cuts will likely be limited in scale.

Demand Remains Steady but Shows Diversification

Overall operating rates at downstream processing enterprises remain stable. In mid-October, when zinc prices declined, Chinese downstream enterprises took advantage of lower prices to replenish inventories. Since November, the upward shift in zinc prices has slightly dampened downstream demand. Weak steel prices and pressures in real estate and infrastructure sectors have led to subpar orders and shipments for galvanized pipes. However, orders for galvanized steel towers in the power sector have provided resilience, while orders for photovoltaic brackets and transportation applications improved after late October. As northern regions enter the winter heating season, environmental factors may increasingly impact enterprise operating rates, while southern market demand is expected to remain generally favorable.

Overall, at the macro level, attention should be paid to the impact of Fed rate cut expectations and precious metal trends on zinc prices. On the supply-demand front, zinc ore processing fees have declined rapidly, while smelters maintain strong buying sentiment for domestic ore. As processing fees decline, smelters face increased production pressure, potentially leading to a slight drop in refined zinc output. Domestic inventories are gradually decreasing, with spot prices trading at a discount, indicating overall supply remains relatively ample. Therefore, marginal changes on the supply side enhance downside support for zinc prices. However, the spot market has not yet shown significant tightness, and market sentiment may weaken. Consequently, zinc prices are likely to remain range-bound in the near term.

As an integrated internet platform providing benchmark prices, on November 24, the benchmark price of zinc from SunSirs was 22,414.00 RMB/ton, an increase of 0.66% compared with the beginning of the month (22,266.00 RMB/ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.