For the Quarter Ending March 2022
The US Zinc market entered the 1st quarter of 2022 with positive sentiments as the CFR California prices escalated slightly from USD3420/mt to USD3490/mt between January and March. As a result of the military confrontation between Russia and Ukraine, trade between the United States and Asia was severely disrupted in mid-H1 of 2022. As the conflict ripples caused delays in the transportation of commodities and spurred higher shipping rates to the already congested ports in the US, several traders were seen keeping a tight eye on freight expenses. The increased demand for Zinc prompted a huge number of businesses to reopen after the CNY holidays, resulting in an increase in the number of orders from the United States. On the back of the uncertainty surrounding the Russia-Ukraine armed confrontation, risk aversion was observed to be rather severe in the second part of Q1. On the demand side, domestic offtakes from downstream sectors remained positive.
During Q1 of 2022, the prices of Zinc Powder improved marginally across the Asia Pacific region. In China, Zinc discussions for FOB Qingdao and Ex-Shanghai got fixed at USD2455/mt and USD2395/mt in the month ending March. Due to the rising number of Omicron variant cases in China, leading producers including NHU and ZMC declared forced closure due to the country’s zero-tolerance policy, which exacerbated the prices of several commodities across the country. In the second half of the quarter, during the Beijing winter Olympics and Spring Festival holidays in China, the demand for Zinc increased significantly from the food and beverage industries, which further supported the price trend in the spot market. The country's increasing energy prices, owing to coal shortages and a zero-tolerance covid policy, as well as pandemic preparedness, prompted delays in coal customs clearance, causing zinc prices to rise across the board. Furthermore, due to the Winter Olympics and the Lunar New Year, there were fewer working days in February, which contributed to the overall lower output.
During the 1st quarter of 2022, the prices of Zinc Powder hopped upwards across the European region on the back of the firm demand. However, lack of supplies somehow disrupted the market sentiments during the quarter. During the second half of first quarter, as the turmoil in Ukraine caused shortages for European industries who rely heavily on Russian supplies, commodity dealers rushed upward to benefit from a once-in-a-lifetime opportunity to transport metals out of China. In Q1, the sharp escalation of a worldwide supply crunch affected European customers the hardest. Furthermore, with global supplies running low, analysts and dealers said the unusual flow of metals from China to Europe only provided temporary relief, while Russian exports remained hampered. The prices of Zinc Powder were fixed at USD2560/mt towards the quarter end.
For the Quarter Ending December 2021
During the 4th quarter of 2021, the market trend of Zinc demonstrated a state of stagnancy across the North American region. The prices of Zinc stabilized in the month of November and settled at USD 3560 per MT CFR California after gaining close to percent in Q3 on the back of weakened supply dynamics. The demand remained consistent throughout quarter 4 by several market participants while remarking that supply fundamentals gained strength in the wake of enhanced supply chains through high logistics availability and stability in fuel costs. The demand for Zinc in the US domestic market is likely to dip following the global demand pattern, which is expected to cause a price decline in Q1 2022.
In the Asia Pacific region, the price trend of Zinc Powder showcased mixed sentiments during the fourth quarter of 2021. In China, market players reported that supplies remained affected in November as Beijing imposed nationwide power curbs due to a slew of factors, including rising coal prices and the nation’s commitment to cut carbon dioxide emission sharply by 2030, which affected the Zinc prices across the country. The shortage of electricity increased the concerns regarding the restart of Zinc smelters, which led to the sharp gains in zinc powder prices in the week ending of November as prices settled at USD 2466/MT FOB Qingdao. The Chinese domestic market was heavily impacted in Q4 by the soaring energy prices power shortages in several provinces as zinc smelting is a major electricity consumer. In the month of December, the increased price competitiveness followed by the surged onboarding activities resulted in a decline in the Zinc prices as the Chinese manufacturers were destocking their inventories ahead of the year-end. In the Indian domestic market, the demand for Zinc remained strong in quarter 4, exceeding the production rate and inventories level of the country. The CFR JNPT prices of Zinc were assessed at USD 3942.60 per MT in December.
In Europe, the domestic market trend of Zinc witnessed an upward trajectory in quarter 4 of 2021 on the back of the strong demand and limited supply. The prices of Zinc reached historical highs across Europe and jumped more than 5% in mid-December on the back of the supply concerns after Belgium-based Nyrstar said it would shutter its plant in France from January due to soaring energy prices.