For the Quarter Ending June 2023
USA
In the second quarter of 2023, the price of Zinc Oxide decreased indefinitely amid declining demand from the downstream automotive industry. The downstream Automotive and construction industry faced sluggish market sentiment because of the seasonal decline as the arrival of the monsoon affected the construction activity. 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 Ignot 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. 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 Oxide market. In the meantime, the inventory level of the upstream 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.
Asia
During the second quarter of 2023, the price of Zinc Oxide in the Asian market experienced a bearish trend, primarily influenced by subdued demand from the downstream automobile industry. Over the last two months of the quarter, the price of Zinc Oxide witnessed consecutive declines of approximately 25% and 11%, respectively, in the Indian market. The weakened demand was largely attributed to global inflationary pressures, prompting consumers to prioritize their spending and focus on essential products. However, the feedstock Zinc Ingot supply followed an upward trajectory as mining activities saw a surge in overseas nations like Australia and Peru. Notably, Sibanye Stillwater's occupancy of the New Century Zinc Mine in Australia led to an increased extraction rate. Polymetals Resources, a major Australian exploration company, also worked diligently to revive the production line at the Endeavor Zinc-Silver-Lead mine in New South Wales, Australia. Furthermore, the mining operation resumed at the Tala Hamza Zinc Project, as Terramin Australia Limited secured mining permits to commence operations. These augmented mining activities resulted in higher inventory levels of feedstock Zinc and subsequently prompted the Zinc smelting mills to reduce their offer prices for Zinc Ingot. Interestingly, in April 2023, the price of Zinc Oxide exhibited a contrasting increase of approximately 25% in the Indian market. This sudden surge was driven by elevated demand from overseas markets compared to the last month of Q1 2023. The demand dynamics in this specific region contributed to the price surge, despite the bearish trend experienced in other parts of Asia.
Europe
In the second quarter of 2023, the price of European Zinc Oxide experienced a continuous bearish trend, primarily driven by higher inventory levels and declining consumer demands. The German Zinc Oxide market also faced a sluggish sentiment. Moreover, the feedstock Zinc Ingot prices witnessed a decline of approximately 3.5%, 5%, and 6.5% in the European region. This decline can be attributed to increased manufacturing activity in the Glencore Nordenham plant, a prominent Zinc Industry in Germany, which led to higher production rates. In addition to the increased production, the Portovesme plant in Italy initiated its production line, contributing to maintaining higher inventory levels in the region. Furthermore, the global market saw a faster extraction rate of feedstock Zinc due to the acquisition of the New Century Zinc mine in Queensland by Sibanye Stillwater, a major Gold-Zinc mining company in South Africa. This acquisition uplifted the extraction rate, resulting in increased supply in the market. Orion Minerals, a global metal exploring company, also boosted its production rate as two major project signings enhanced their mining process. However, the demand for Zinc Oxide from the downstream rubber industry remained muted. The labor crisis across Europe became a significant concern, directly impacting the downstream rubber industry. Buyers hesitated to place large orders as they sought a clearer view of whether the prices of Zinc Oxide had reached their lowest point.
For the Quarter Ending March 2023
North America
North America saw moderate to low demand for Zinc Oxide during the first quarter of 2023. The market struggled with slow economic activity, even though production remained uninterrupted. Data shows that the rubber, ceramics, and paints sector improved marginally by the end of the quarter but faced inflationary pressure. The FED's frequent price revisions for domestic interest rates remained a major concern for the country's economy and impacted the demand for the product. Labor shortage also remained a matter of concern for the country, which led the Houston port to close for a couple of days.
Asia
The prices of the product increased in the Indian market in March 2023 due to the seasonal demand surge, particularly in downstream industries, leading to a bullish market. The supply of the product remained steady, and expensive imports also influenced the upward trend in prices. In contrast, prices fell in February 2023 due to low demand, despite India's better market performance than many major economies. The supply remained stable, and expensive imports were the driving factor behind the price trend. Downstream industries witnessed a favorable upswing in demand during the recent seasonal period, prompting key players and traders to secure cargo for future months.
Europe
The European economy has been struggling due to the Russia-Ukraine war, which has negatively affected regional economic activities. Data shows that demand for Zinc Oxide from the domestic automotive sector has remained low, while other sectors, such as construction and textiles, have also experienced low demand. Despite some disruptions in the supply chain caused by snow, supplies remained stable to firm, and the narrow demand-supply gap supported a downward price trend. The reduced risk of a recession generated hope for future demand.
The market prices of Zinc Oxide showcased mixed sentiments in the North American market during the fourth quarter of 2022. The Zinc Oxide prices increased in October, only to fall back again in the following months. Slumped downstream demand from the rubber vulcanization industry was one of the major factors behind the price drop of Zinc Oxide as the quarter proceeded. Furthermore, the decline in natural gas prices was another crucial reason behind the fall in the Zinc Oxide market. In addition, destocking at the end of the year, when market participants were focused on just emptying their inventories even at a lesser cost, also contributed to the price decrement of Zinc Oxide.
In the fourth quarter of 2022, the market value of Zinc Oxide showed conflicting feelings in the Asia-Pacific region. Prices for Zinc oxide rose in October before declining once more in the months that followed. As the quarter went on, the downstream demand from the rubber vulcanization industry dropped, which was one of the main reasons behind the sharp fall in Zinc oxide prices. Another significant factor for the drop in the market for Zinc oxide was the decline in natural gas prices. Destocking at the end of the year, when producers were concentrating on simply emptying their stocks even at a lower cost, also played a role in the decrease in Zinc oxide's price.
The prices of Zinc Oxide in the European market displayed contrasting sentiments in the fourth quarter of 2022. Zinc oxide prices increased in October before again falling in the months that followed. One of the key factors influencing the decline in Zinc oxide pricing during the quarter was a decline in downstream demand from the rubber vulcanization sector. The reduction in natural gas prices was a key contributor to the decline in the market for Zinc oxide. The price decline of Zinc oxide was also influenced by destocking at the end of the year when producers were focused on merely emptying their supplies even at a reduced cost.
