Price Trend
According to the data monitoring of business associations, the trend of zinc price in 2019 rose first and then decreased. In the first quarter, the price of zinc rose sharply, and began to reverse downward in early April. At the beginning of the year, the domestic and foreign zinc prices were about 22,000 yuan/ton, rising all the way, rebounding to about 23,000 yuan/ton in early April, and then declined to 19,300 yuan/ton in July. Zinc prices in and out of the first half of the year showed an inverted “V” trend. As of July 24, the price of zinc was 19556.67 yuan/ton, up 1.19% from the lowest price of 19326.67 yuan/ton in the year, down 16.71% from the highest price in the year, down 11.75% from the beginning of the year, and down 10.65% from the same period last year.
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II. Market Trend Analysis
data statistics
According to data released by the World Bureau of Metal Statistics (WBMS), the global supply gap of zinc in January-May 2019 was 47,000 tons, while that in the whole year of 2018 was 67,000 tons. Global refined zinc production declined by 2.8% year on year, while consumption increased by 3.5% year on year. Global demand increased by 186,000 tons from January to May 2018. China’s apparent demand is 2.552 million tons, accounting for 47% of the global total.
According to a report released by the International Lead and Zinc Research Group (ILZSG), the global zinc supply gap narrowed to 27,200 tons in May and was revised to a shortage of 87,500 tons in April. In the first five months of this year, the global supply shortage of zinc increased to 123,000 tons, compared with 103,000 tons in the same period last year.
Data show that the global zinc supply shortage in 2019. Zinc prices rose sharply in the first quarter, which is in line with the performance of zinc supply shortage. With the increase of zinc supply and the weakening of zinc demand, the price of zinc has fallen.
Import and export data
According to the latest data released by China Customs, the import volume of 0# zinc ingot in May 2019 was 368,000 tons, a decrease of about 44.5% annually and a decrease of about 32.0% year on year. In May, China imported about 12,964 tons of 0_zinc ingots from Australia, a decrease of about 24.9% in ring-to-ring ratio; imported about 8,284 tons of 0 zinc ingots from Kazakhstan, a decrease of about 24.0% in ring-to-ring ratio; imported 0 zinc ingots from Belgium, a flat ring ratio; imported about 301 tons of 0 zinc ingots from Spain, a significant decrease of about 98.6%. China’s zinc ingot imports fell sharply, reflecting weak demand in the domestic zinc market. The quantity of imported zinc ingot decreases, and the supply of zinc ingot is relatively affected.
Domestic Zinc Production
In 2019, the production of zinc increased month by month, and the domestic zinc production increased significantly. The supply of zinc in China was gradually turned from insufficient supply to excess supply. Future zinc prices are not optimistic.
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High zinc processing cost
In 2019, the zinc processing fee is obviously on the high side, stimulating zinc smelting enterprises to increase start-up, increasing zinc production supply may increase, and the risk of excess supply in the future will increase.
Downstream demand
According to the statistics bureau, GDP grew by 6.3% in the first half of the year. In the first half of the year, investment in real estate development in China increased by 10.9% compared with the same period last year, and increased by 11.2% from January to May. The steady growth of real estate and fixed investment has a certain positive impact on the demand for zinc ingots, but the decline in land transaction area and the small drop in the sales area of commercial housing show that the real estate market is not good, and the future real estate market is not optimistic. In the second half of the year, real estate demand for zinc is expected to decline, and zinc market in the future is negative.
In the automotive sector, the global automotive market is weak and sales have fallen sharply. Although there are various policies to stimulate automotive consumption, the effect is not obvious. Future automotive consumption is bearish, and the demand for zinc in the automotive industry has declined significantly.
As for household appliances, air-conditioning output increased significantly in the first five months of this year, but since the second quarter, rainwater in the whole country has been more than in previous years, hot weather has been pushed back, and air-conditioning sales have fallen short of expectations. Since April, domestic air-conditioning inventory has been at a high level, which limits the later production scheduling space. It is expected that the seasonal weakening of air conditioning production will be very significant after July. The output of refrigerators and washing machines is mainly stable and the increment is limited. The demand for zinc in the future household appliances market is bound to drop dramatically, affecting the rebound of zinc market.
3. Prospects for the Future Market
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According to Bai Jiaxin, an analyst of business associations, the output of domestic zinc market is increasing month by month in 2019. In the first quarter, the zinc market is still in a state of supply shortage. However, with the increase of zinc production month by month, the zinc shortage gap decreases, and the zinc market is gradually changing from short supply to over demand. On the supply side, high zinc processing fees stimulate zinc smelting enterprises to expand production capacity, and zinc production in the future or further increase; on the demand side, automobile consumption is weak, and the demand for household appliances is declining in the future, the demand for zinc in the future is declining seriously, and the performance of the real estate market is still acceptable for half a year, but in the second half of the year, the real estate market is expected to decline. Slip has a negative impact on zinc demand. Generally speaking, the domestic zinc market shows a gradual increase in supply and demand, which gradually changes from short supply to oversupply. The demand of future zinc market is expected to decline, and the state of oversupply in zinc market will not improve in the short term. In the future, the price of zinc is expected to continue to oscillate and fall, and the rising period of zinc price is uncertain.