Zinc Ingot Prices Diverge as US Market Faces Decline While Chinese Demand Rises Amid Stimulus Measures
- 25-Oct-2024 9:30 PM
- Journalist: Gabreilla Figueroa
The Zinc Ingot market witnessed notable regional disparities as US prices dropped 1.5% while Chinese markets climbed by the same percentage in the week ending October 18th. This contrasting movement underscores the unique market conditions in each region, with US markets responding to increased domestic production while Chinese prices reflected government stimulus measures and strong industrial demand.
In the United States, Zinc Ingot prices faced downward pressure due to improving domestic production metrics. Red Dog's zinc production showed a notable 14% increase compared to the previous year's third quarter, significantly boosting Zinc Ingot supply. The enhanced output stems from improved mill availability and reduced unplanned maintenance periods. Further contributing to the supply increase, Titan Mining's Empire State zinc mine in New York has resumed full operations following disruptions from historic flooding in August. The global logistics sector continues to impact Zinc Ingot trade flows, with maritime freight rates for bulk mineral and shipments, including Zinc Ingot cargo, maintaining their downward trajectory following an early peak season. This decline in shipping costs for industrial metals and raw materials, attributed to accelerated cargo loading schedules and forecasts of subdued winter demand, represents a market correction from previously inflated bulk carrier rates.
Meanwhile, Chinese Zinc Ingot markets are experiencing upward momentum, driven by government economic stimulus measures and robust downstream demand. The People's Bank of China's decision to reduce loan prime rates to historic lows, including a cut in the five-year rate to 3.6%, has boosted market sentiment. This move is expected to ease mortgage pressures and stimulate home buying activity, potentially increasing Zinc Ingot demand in construction-related sectors. China's Zinc Ingot market has also responded positively to better-than-anticipated economic indicators, including strong retail sales, industrial production, and fixed asset investments in September. However, the market faces supply-side challenges, with global zinc production expected to face a significant deficit in 2024 due to raw material constraints affecting refined metal production. Adding to the price pressure in China's Zinc Ingot market, energy costs have risen amid fluctuating oil and natural gas prices, largely influenced by Middle East tensions. These elevated energy prices have contributed to the overall increase in Zinc Ingot prices within the Chinese market.
Present market trends indicate ongoing obstacles in the resurgence of demand, especially within the United States where the pace of inventory replenishment has lagged behind projections. The combination of high inventory levels, weak downstream demand, and macroeconomic headwinds suggests continued pressure on Zinc prices. However, industry experts maintain a positive outlook on the future of the Zinc Ingot market. The prevailing positive outlook is primarily attributed to the anticipated increase in demand following the economic stimulus initiatives in China. ChemAnalyst forecasts that the Zinc Ingot market will experience rising prices soon, as demand escalates across various industries.