Supply concerns from Chinese zinc smelters impacted the prices of US zinc scrap delivered consumers on Thursday.

 

The weekly Davis Index for new zinc diecast dropped by 2¢ from the previous week to 72¢/lb on Thursday, while the index for special high grade zinc premium remained at 8.5¢/lb, as market participants tried to gauge the long-term impact of the coronavirus on zinc demand and supply.

 

The Davis Index for zinc galvanizers bottom dross remained at 76¢/lb and was unchanged at 73¢/lb for zinc galvanizers top dross.

Zinc market fundamentals have softened over the past week amid concerns over the impact of the coronavirus outbreak. 

 

Henan Yuguang Gold and Lead, one of China’s biggest lead and zinc producers, has been adversely affected by the outbreak. Last week, the company cut zinc output by 50pc because it was unable to shift high inventories of its sulfuric acid byproduct.

 

Data also suggests that zinc ingot inventory in smelters has been rising steadily to over 100kt since the outbreak was first reported in China. The utilization ratio of galvanized, as well as diecast, zinc has also fallen sharply to below 40pc. 

 

Moreover, while most of China’s metropolitan areas are now open for business, the country is under pressure to curtail the virus’ spread. It is looking to keep some businesses and areas closed until Feb 24, which is likely to further impact zinc supplies on the market.

 

The three-month official LME zinc contract fell by $52 to close on Thursday at $2,115/mt from $2,167/mt last week.

 

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