The early 2023 rally of Zinc prices waned following the decline in power prices and the subsiding of the winter energy crisis in Western Europe. The zinc market followed a downward trend, with the surge in zinc supply as a result of surplus inventories. As per the London Metal Exchange (LME), Zinc inventories in registered warehouses increased by 40% to approximately 61,025 tonnes.
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In China, smelters are now able to successfully increase capacity with the abundant raw material supply and the consequent beneficial processing fees.
Meanwhile, the zinc market experienced a downturn in Europe due to weak downstream demand and adequate availability and supply of Non-European metals. The regional European market has successfully weathered the winter energy crisis.
According to Citi, the smelter margins have once again turned positive, with a cash margin of approximately 250 USD per tonne in comparison to a net loss of approximately 840 USD per tonne in August 2022.
Furthermore, the low consumption from the end-use galvanizing industry as a result of the weak global manufacturing activity weighed down on zinc prices. In the United States, As per the domestic traders, the inquiries of zinc and its by-products have been hampered by the region's slowing construction industry.
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As per the article by Procurement Resource, the prices of Zinc followed a bearish trajectory owing to the falling power prices and the subsiding winter energy crisis in Europe.
Increased zinc supply as a result of surplus inventories resulted in a downward trend in the market, whereas China's smelters profited from adequate raw material supply as well as improved processing fees. Furthermore, the slowdown in global manufacturing activities and the sluggish American construction industry dampened zinc prices.
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