Global zinc markets present a mixed picture. China's production surge contrasts with Germany's inventory-driven price gains, while smelter expansions and cuts reshape supply.

Key Takeaways:

• Zinc ingot prices in China fell in late March due to increased production but lower prices could trigger more buying, potentially lifting prices in the short term.
• Zinc concentrates treatment charges (TCs) remained steady as imported and domestic zinc ore supply remained sufficient.
• With increasing zinc production in Europe and recovering downstream demand, zinc ingot prices are expected to remain rangebound in the near term.

China

Die casting zinc alloy businesses used lower raw material costs to significantly increase their inventories. The demand for furniture accessories remained weak in terms of orders and did not react to price decreases. Conversely, daily hardware orders, particularly for luggage zippers, remained steady and showed increased activity this week. The decline in zinc ingot prices stimulated overall market demand, but it has yet to reach typical peak season levels.

Zinc concentrates treatment charges (TCs) held steady week-over-week. Ample imported zinc ore deliveries, combined with recovering domestic production, ensured zinc ingot manufacturers maintained high raw material stockpiles. Consequently, zinc ore supply is expected to rise. Chinese port inventories of zinc concentrate remained high, reaching 341,400 metric tons, a slight weekly increase.

In late March, zinc ingot prices witnessed a fall of 1% as China zinc smelters are willing to increase production. By the end of March, it is expected that zinc ingot production will increase by 13% m-o-m supported by capacity expansions in Shaanxi and Qinghai and post-holiday recovery. However, lower zinc ingot prices are expected to prompt increased buying on dips by downstream enterprises which can take prices upwards.

Germany

Zinc ingot prices in Germany witnessed a opposite trend as prices increased marginally by 0.4% (FD Willich) w-o-w. Despite ongoing challenges, the German automotive sector is showing signs of increased optimism, with order books gradually improving. On the supply side, LME special high grade zinc inventory decreased by 3.5% w-o-w, settling at 154,400t. In the spot ore market, zinc smelters continued to observe this week with limited raw material purchasing activities, keeping zinc concentrate TCs steady.

In a recent announcement, Boliden confirmed the successful completion of its Odda smelter expansion project in Norway. The expansion, which aligns with market expectations, has increased the smelter's annual capacity from 200,000 to 350,000 mt. Meanwhile, Nyrstar, a Trafigura company, revealed plans to cut its Australian Hobart zinc production by a quarter from April 2025.

With increased zinc ingot production in Europe in the coming days, and downstream orders still recovering, it is expected that prices will be rangebound in the short term.