For the Quarter Ending June 2023
North America
In the second quarter of 2023, the price of Zinc Ingot decreased indefinitely amid declining demand from the downstream construction and automotive industry. The downstream construction sector faced sluggish market sentiment because of the seasonal decline, as the arrival of the monsoon affected the construction activity. The reduced construction activity limited the demand for Galvanized steels and ultimately increased the inventory level of Zinc ingot. Meanwhile, economic instability was observed in Q2, majorly due to the debt crisis caused by the downfall of major banks in the USA. The rising inflation across the country and global market created a pessimistic Zinc Ingot market. In the meantime, the inventory level of the feedstock Zinc remained at a higher edge as the mining activity rushed amid Terramin Australia Limited received the permit for the Tala Hamza Zinc Project, which increased the supply quantity. Additionally, Sibanye Stillwater, a major Gold-Zinc mining company in South Africa, has acquired the New Century Zinc mine in Queensland, which uplifted the extraction rate in the global market. Orion Minerals, a global metal exploring company, also increased the extraction rate by signing several new deals for mining upliftment. The downstream automotive industry lacked demand from the consumer’s side as the depriving economic condition halted the purchasing ability of residents for vehicles. Furthermore, the decreased consumption of natural gas and fuel due to rising inflation caused a decline in fuel prices. This plunged the energy cost for producing Zinc Ingot in the local smelting mills and declined the premium cost of Zinc ingot across the US spot market. The ripple effect of uncertain economic conditions and lack of downstream demand provoked the buyers to shy away from placing large orders, and the local Zinc Smelting units were incited to decrease the offer price of Zinc Ingot in the US spot market.
Asia
The second quarter of 2023 showed a decrementing price trend for Zinc Ingot as the economic condition dampened in the global market. The supply of feedstock raw material was on an inclining trend as the mining activity increased in overseas nations such as Australia and Peru. The Sibanye Stillwater occupies the New Century Zinc Mine in Australia, which increased the extraction rate. Polymetals Resources, a major Australian exploring company, has been putting efforts to bring the production line back in the Endeavor Zinc-Silver-Lead mine in New South Wales, Australia. The mining operation will resume in the Tala Hamza Zinc Project as Terramin Australia Limited receives mining permits to start mining operations. This increased mining activity resulted in the increased inventory level of feedstock Zinc and provoked the Zinc smelting mills to reduce their offer prices for Zinc Ingot. The downstream construction sector dampens as the global economic condition downturns. This reduced the usage of Galvanized sheets and hence declined the demand and price of Zinc Ingot. The mid-size construction companies plunging in South Korea declined due to increasing prices of other raw materials such as concrete and cement in the spot market. The South Korean economy was also on a lower trend as it barely avoided the tendency to move toward a recession, as the GDP grew 0.3% in Q1 as a result of improved trade and consumption. The uncertain and declining economic tendency provoked the buyers to shy away from placing large orders. The domino effect created by the decreased downstream construction demand and increased feedstock Zinc mining activity created a pessimistic market sentiment and incited the local Zinc smelting mills to decrease their offer prices across South Korea.
Europe
The price of German Zinc Ingots faced a continuous declining phase in the second quarter of 2023, as the inventory level remained on a higher edge amid declining consumer demands. The German Zinc Ingot market faced a sluggish sentiment as the production rate was high due to increased manufacturing activity in the Glencore Nordenham plant, a major Zinc Industry in Germany. Additionally, the inventory level was maintained at a higher level as the Portovesme plant in Italy also started its production line. Furthermore, the extraction rate of feedstock Zinc was at a faster pace, amid Sibanye Stillwater, a major Gold-Zinc mining company in South Africa, acquired the New Century Zinc mine in Queensland, which uplifted the extraction rate in the global market. Orion Minerals, a global metal exploring company, increased its production rate as the two major projects signing benefited the mining process. Meanwhile, Terramin Australia Limited had also received the permit for the Tala Hamza Zinc Project, which led to a surplus supply of imported Zinc in the German spot market. The declining economic condition across Europe led to the recession in Germany in mid-Q2. The H2 of the second quarter faced a drastic situation amid rising inflation which led the local buyers to decrease their offer price as downstream construction and automobile sectors plunged. The labor crisis across Europe became a major concern as it reduced the construction and infrastructural development activity across the German spot market. The buyers were hesitant to place large orders as they wanted a further clear view as to whether the prices of Zinc Ingot had hit rock bottom or not.
For the Quarter Ending March 2023
North America
In Q1 2023, the Zinc Ingot prices in the US market remained stagnant due to higher inventory levels and flat lead times amidst financial turmoil. The downstream manufacturers had raised their spot offer prices in January, but some buyers attempted to stick to their contracts. The demand remained steady, and some service centers were concerned that customers had pushed future demand forward to beat rising steel prices. Input demand fell, and materials became more readily available at suppliers, which resulted in inflationary pressures easing. The domestic zinc market demand was recovering, and the processing costs remained high, but zinc ore supplies were adequate. The supply and demand for zinc increased, with market participants claiming that zinc market demand exceeded expectations. In March, the zinc inventory generally showed an upward trend, and traders were concerned about a lack of systemic liquidity against interest rate hikes. As a result, the Zinc Ingot prices for Ex Chicago and CFR Illinois Port settled at USD 3268/MT and USD 3062/MT, respectively.
Asia Pacific
In the first quarter of 2023, Zinc Ingot prices showcased an inflated price trend in the Chinese market due to higher demand from the downstream galvanizing industry. However, the Chinese New Year Holidays resulted in few market inquiries from downstream players in January. In February, Zinc prices dropped, encouraging some downstream enterprises to purchase, and the overall trading market recovered to some extent. However, the supply of zinc ore smelting increased, and the demand growth was limited. In March, the turmoil in the banking sector added to the risks of bank failures and a slowdown in economic growth. Spot supply was tight in the market on low arrivals, and traders tended to purchase on rises instead of dips. The falling ferrous metal prices also affected new orders for galvanized plates/sheets and structures. Nevertheless, market players believe that consumption will be resilient for some time, considering the rigid demand during the ongoing peak season. The Zinc Ingot prices for FOB Tianjin settled at USD 3380/MT as a result of this trend.
Europe
The Zinc Ingot prices in the German market continued to rise in Q1 2023 due to high order books, long lead times, and limited imports. In January, downstream manufacturers pushed for higher prices, but buyers resisted due to a lack of end-user demand. In February, buying interest in the downstream Galvanized Plain Sheet segment was limited as buyers digested recent price increases. Domestic prices for downstream coil products were supported by strong order books from European mills, but traded volumes remained limited. In March, the banking crisis and depressed market sentiments caused concerns about future economic downturns and inadequate demand. Downstream consumption of zinc remained mediocre with no sign of significant increase. Domestic prices fell due to the cautious bearish stance of buyers. The Zinc Ingot (99.9%) prices for Ex Koblenz and FOB Hamburg settled at USD 4623/MT and USD 4675/MT.
Due to continuous slow end-user demand in the US, the Zinc ingot market declined in the fourth quarter of 2022. Imports were restricted in the mid-quarter due to China's Golden Week holiday leading to a shortage of material available in the US market. According to market analysts, during the quarter, ongoing supply disruptions, high inflation, and China's zero-COVID policy helped alleviate general concerns about a recession and dampen hopes for a rebound in the United States. The US supply chain, however, showed a steady improvement later in the quarter as the recessionary fears eased and the ports experienced a significant drop in ship backlogs after a prolonged port backlog.
In the fourth quarter of 2022, the domestic Zinc ingot market in China showed stagnancy despite the rising raw material prices. The export orders for China's industry producing Zinc ingot declined steadily in the mid-Q4 of 2022 due to the shutdown of industrial facilities for the Golden Week and staff shortage. The situation was further worsened by another rise in covid cases and consequent lockdowns. Consistent end-user industry demand during the fourth quarter has been mostly blamed for the overall pricing trend. Because they had enough inventory on hand, domestic producers and suppliers were able to meet all domestic demand for the whole quarter. Christmas holidays and the approaching Spring festival declined the market demand and industrial output.
The market prices of Zinc Ingot in the fourth quarter of 2022 followed the uptrend in the European market on account of increasing demand and limited inventories level in the regional market. Major manufacturers had to halt the operational rate in the German market due to elevated energy prices along with staff members. The manufacturers claimed that the price rose in order to meet the upstream industries' increased production costs as a result of rising energy prices. It was challenging for mills to reach their goal prices due to low demand from distributors and end users, notably the automotive industry, as well as from competitors' import offers. Due to the lack of end-user demand, however, spot buyers have not expressed much interest in making a purchase.
