For the Quarter Ending June 2022
During the second quarter of 2022, the Zinc Ingot prices witnessed mixed sentiments. Zinc Ingot's price skyrocketed over the first half of the Q2 of 2022 until May, then plunged in June. Zinc premiums in the United States reached all-time highs in May, owing to intense competition with Europe for available units and lower-than-expected output. Throughout the quarter, the extensive supply chain and prolonged port interruption hampered the supply system. Multiple ports were congested, with empty store shelves, idle plants, and billions of dollars in goods stuck in overburdened distribution networks. In addition to the combative signals from the US Fed, which signaled an interest rate hike and a reduction in the balance sheet in May, a lingering COVID pandemic in China had affected many aspects of the country, including transportation, demand, and other areas. After May, supply and demand began exacerbating as imports were restricted due to Chinese lockdowns.
Zinc ingot prices in the Asia Pacific region in Q2 2022 were volatile for various reasons. Prices in China increased slightly in the first half of Q2 due to higher zinc prices caused by the ongoing Russian invasion of Ukraine, which forced numerous zinc smelters to halt or reduce zinc production. Fears of a collapse in the economy in the second quarter of 2022 were sparked by a sharp slowdown in China's economic activity in April when lockdowns severely disrupted employment and industrial production. Exports continued to be impacted as the SHFE/LME pricing ratio improved in the second half. After May, the China producer pricing index (PPI) fell to 8%, the market turned negative, and prices became limited due to lower-than-expected downstream orders. Demand headwinds were generated by China's zero-COVID tight policy, energy-driven inflation, rising real US rates, and a strengthening dollar.
Zinc ingot prices in the European market showcased a sluggish trend during the second quarter of 2022. Despite the deterioration of the European market, premiums remained high as ongoing logistics issues weighed on regional consumer demand. Due to Europe's limited supply and logistical issues, zinc Ingot prices remained noticeably high this quarter. Customers are beginning to request order delays from [the third quarter] until 2023, indicating potential fragility. The downstream industries' offtakes remained consistent throughout the quarter, further strengthening the demand outlook. This was reflected in the Italian zinc market, where premiums fell from a record high during the second week of June, owing to a rise in bearish sentiment and weakening demand. As per market players, the premiums remained high for the remainder of the year, making it difficult for consumers to operate due to rising costs, such as energy.
For the Quarter Ending March 2022
Zinc Ingot prices rose in the first quarter of 2022 across the North American region. Zinc prices soared beyond USD4,000 per tonne in the second part of Q1 to a 15-year high, propelled by increased energy costs and supply concerns. In mid-February, the price of zinc ingot was set at USD3520 per metric tonne. On March 7, the three-month zinc contract traded on the London Metal Exchange (LME) soared to USD4,247 per metric tonne, the site's highest price since records began in 2007. Zinc metal prices, on the other hand, have declined since their high on March 7, although they are still 7% higher than they were at the start of the year.
In the Asia Pacific region, the price trend of Zinc Ingot witnessed a marginal increment in Q1 2022 after the prices escalated from USD3305/mt and USD3375/mt from January to March 2022. Shanghai Metals Market (SMM) concluded with gains in overnight trading on Friday, March 11 in China during the first half of 2022, after the Federal Reserve signalled robust measures to combat inflation in the country. According to the SMM survey, domestic refined zinc output fell more than predicted in February due to a number of issues, including normal maintenance at some smelters in Yunnan and production unit suspensions due to Spring festival holidays. Overall, domestic smelters resumed steady output following the second week of February, adding to the market's supply. On the demand side, the end-user automobile and pharmaceutical industries saw significant offtakes throughout the quarter.
European Zinc Ingot market showcased mixed sentiments during the 1st quarter of 2022 amidst lack of supplies & firm demand from end-user industries. In the latter half of 2022, commodities traders raced upwards to capture a rare profit from shipping metals out of China as the war in Ukraine created shortages for European manufacturers who heavily relied on Russian supplies. The dramatic escalation of a global supply squeeze hit the European buyers hardest during H2 of 2022. Moreover, as the global inventories were running low, analysts and traders said that the unusual flow of metals from China to Europe only brought short-term relief while Russian shipments remained hobbled.
In quarter 4 of 2021, the pricing trend of Zinc Ingot demonstrated a state of stagnancy across the Asia Pacific region. In the Chinese domestic market, the prices of Zinc Ingot fluctuated around USD 3684/mt and USD 3300/mt FOB Tianjin from October to December. Several Chinese market players stated that the supplies remained affected in the month of November as Beijing imposed nationwide power curbs due to an array of factors, including rising energy prices and the nation’s commitment to cut carbon dioxide emission sharply by 2030, which affected the prices of Zinc in the country. The shortage of electricity increased the concerns regarding the restart of Zinc smelters, which led to the sharp gains in zinc prices, further affecting the market of Zinc Ingot across China.
The European market of Zinc Ingot mimicked the market trend of other regions during the fourth quarter of 2021. The demand for Zinc Ingot remained strong through Q4 amid limited supply in the region. Zinc metal prices reached all-time highs across Europe and jumped more than 5% in mid-December, followed by the supply concerns after Belgium-based Nyrstar said it would shutter its plant in France from January due to skyrocketing energy prices.