The Asian zinc ingot market encountered challenges in late February, as prices in China and Japan declined due to increasing inventories and a sluggish demand recovery. While China grappled with oversupply, Japan's market adjusted to increased availability. Meanwhile, global mine production shifts continued reshaping supply dynamics.

The Chinese zinc ingot market faced downward pressure in the third week of February, with prices dipping by 0.4%. This marginal decline reflects a confluence of factors, primarily a growing inventory and sluggish demand recovery. Specifically, zinc ingot stockpiles across China rose week-over-week to 145,600 metric tons, indicating an ample supply.

The closure of the zinc ingot import window, coupled with the arrival of prior locked-price shipments, resulted in higher bonded warehouse inventory levels. This increase in inventory, coupled with the slow resurgence of downstream consumption following the Lunar New Year holidays, has resulted in a persistent short-term supply surplus.

Essentially, the market is experiencing an oversupply relative to immediate demand. Consequently, zinc ingot prices are struggling to gain significant upward momentum, as the fundamental balance remains tilted towards excess supply.

In late February, Japanese zinc ingot prices fell by 1% due to expectations of rising supply outpacing the still-recovering demand from downstream industries. The LME zinc inventory, which had been decreasing over past weeks, saw a sharp reversal this week, with a 7,400-tonne increase bringing the total to 161,000 tonnes by February 25th.

DOWA Holdings, a key manufacturer in Japan, is working to achieve a 50% stable raw material procurement ratio through its own mines and recycling efforts. The recent full acquisition of Akita Smelting is a key step towards this goal and is projected to increase raw material availability for zinc ingot production.

While global zinc mine production experienced a slight 2.8% decline in 2024, significant output increases were observed in Bolivia, Mexico, and Congo. Looking ahead, maiden drilling at Udias has yielded high-grade zinc intersections, prompting continued drilling throughout the first half of 2025 to explore this promising area. Additionally, in Australia, the Mount Isa rail line, a crucial transport route for zinc from Glencore's mining complex, has resumed operations after a weather-related closure in early February.

It is expected that tight ore supplies, and declining treatment charges are creating significant headwinds for Asia's zinc ingot market. Korea Zinc expects these pressures, combined with increased competition and rising costs, to result in a difficult year. However, Hindustan Zinc remains optimistic, anticipating increased production and profitability in 2025 despite existing market deficits.