According to the monitoring of the commodity market analysis system of Shengyi Society, as of March 27th, the price of 0 # zinc was 23202 yuan/ton, an increase of 2.27% compared to the zinc price of 22686 yuan/ton on March 23rd.
The domestic zinc market has emerged from a trend of oscillating saw and then rising, with fierce game between long and short sides. Prices have not moved out of a unilateral trend, and overall show a pattern of narrow fluctuations and a strengthening trend at the end of the trading day. The market reflects both the support from the cost side and the reality of weak supply-demand stalemate.
This week, the zinc price is based on the Shanghai Futures Exchange’s main contract for Shanghai zinc and domestic spot 0 # zinc ingots as the core reference. The price fluctuations are in line with market sentiment and changes in supply and demand news, and the overall trend is stable. The recovery was completed in the late trading session.
raw material end
In terms of zinc concentrate supply, the resumption of production in domestic mines has accelerated, and the production of zinc concentrate in major production areas such as Yunnan has steadily rebounded. Coupled with sufficient imported ore sources, the market supply of ore is relatively loose. The difficulty of purchasing raw materials for smelters has decreased, and the bargaining space has expanded. The processing fee for zinc concentrate continues to rise, and this week the processing fee remains at 1500-1700 yuan/ton, with a slight increase of 100 yuan/ton during the week. The increase in processing fees means that the profit margin of smelters has been restored, the shortage of raw materials has been completely alleviated, and zinc prices have lost the upward momentum brought by the shortage of mineral resources. There is no obvious positive stimulus on the raw material side, with loose supply and stable costs, which cannot provide strong upward momentum for zinc prices. This is also one of the core reasons for the sustained fluctuations in the mid week market.
Supply and demand side
The domestic zinc ingot supply side maintains a stable release, the operating rate of smelters remains high, and the production has steadily rebounded month on month. Against the backdrop of sufficient supply of zinc concentrate and rising processing fees, mainstream zinc smelting enterprises in China have shown high production enthusiasm. Except for routine maintenance enterprises, most refineries are operating at full capacity, and the market supply of zinc ingots continues to increase.
The downstream demand in the zinc market has shown a flat performance, and the traditional spring peak season recovery is not as strong as expected. The weak terminal consumption is the core factor suppressing the strength of zinc prices. The downstream of zinc ingots is mainly concentrated in the galvanizing industry, zinc alloy die-casting, batteries, steel anti-corrosion and other fields, among which the galvanizing industry accounts for more than 70%, and the demand trend directly determines the consumption of zinc in the market. In terms of galvanizing enterprises, downstream processing plants have steadily resumed work and production this week, but there has been no significant increase in terminal order volume. Downstream industries such as home appliances, automobiles, and steel structures have slow demand recovery, and galvanizing enterprises have maintained a median operating rate. Enterprises often adopt a strategy of on-demand procurement and buy as you go, with low acceptance of high priced zinc ingots. When prices are weak at the beginning of the week, they replenish on demand and wait and see immediately after prices rise. Large scale replenishment is rare, making it difficult to drive zinc prices to continue rising.
In terms of inventory, social inventory in the zinc market has accumulated slightly this week, and the magnitude of the accumulation conforms to seasonal patterns, which has a certain degree of suppression on zinc prices.
comprehensive analysis
In the short term, it is difficult for domestic zinc prices to experience a unilateral sharp rise or fall. In the future, we need to focus on the recovery progress of downstream galvanizing and die-casting industry orders. If terminal demand is concentrated and released, the surge in demand will break the deadlock of oscillation.
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