Zinc ingot prices came under pressure last week as increased supply and stable production costs led to discounted prices. At the same time, weak downstream demand added to the bearish sentiment in the market.

Key takeaways:

• Zinc ingot prices dropped in late April amid weak spot demand, limited trading activity, and traders’ holiday-related absence.
• Inventories increased as galvanizing enterprises focused on fulfilling earlier orders amid Labour Day shutdowns

Due to sufficient pre-holiday zinc ingot inventories and a negative price outlook among downstream users, purchase demand remained weak. As more zinc ingot shipments arrived, traders responded by reducing premiums and increasing discounts, consequently pushing prices lower. Overall trading volume for zinc ingot was moderate.

Zinc ingot inventories saw an increase this week as downstream galvanizing enterprises, having secured prices earlier, focused on taking delivery of existing orders or fulfilling long-term contracts. This contributed to a significant 12.83 percentage point week-on-week decrease in the operating rate of galvanizing producers, which primarily resulted from Labour Day holiday shutdowns ranging from 1 to 5 days across most enterprises.

On the supply side, refined zinc production, the precursor to zinc ingot, in China experienced a 1.6% monthly rise and a significant 10% annual increase in April 2025. Notably, the provinces of Gansu, Qinghai, Yunnan, Sichuan, Hunan, and Shanxi were the main contributors to this overall production growth.

The ample supply of zinc concentrate, indicated by rising domestic and imported treatment charges (TCs) in early May, suggests a well-supplied raw material market for zinc ingot production. Strong year-to-date zinc concentrate, and the continued arrival of previously ordered shipments point towards sustained concentrate availability in April and May, likely supporting stable or potentially lower zinc ingot production costs.

Leading into the Labour Day holiday, China's zinc ingot market experienced a 1.3% price decrease in the last week of April. The holiday's approach stalled inventory declines and dampened consumption expectations, causing SHFE zinc to fluctuate. Thin market supply due to trader leave and limited downstream spot purchases resulted in sluggish overall transaction volumes.

While some zinc ingot enterprises experienced a temporary rise in export orders in April due to tariff pre-stocking within a 90-day grace period, the overall impact was limited by fears of in-transit tariff hikes and cautious downstream demand. Consequently, significant growth in exports for May remains uncertain.

Zinc ingot prices are currently sensitive to the ongoing Sino-US tariff negotiations and upcoming economic indicators. On the supply side, increased domestic zinc mine output and improved processing fees have made smelters profitable, leading to stable refined zinc production forecasts for May despite some maintenance. However, on the demand side, despite pre-holiday inventory drawdowns, concerns about weakening consumption post-May due to tariff impacts and reduced export orders could pressure zinc ingot prices.