As of June 11th, the price of 0 # zinc was 24152 yuan/ton, a decrease of 2.25% from the zinc price of 24708 yuan/ton on June 1st.
fundamentals
At the macro level, multiple factors resonate to suppress emotions in the non-ferrous metal sector. The overall stance of the Federal Reserve’s June interest rate meeting is hawkish, coupled with the US May non farm payroll data exceeding expectations, the market is once again facing a combination of “strong employment+rising inflation”, and financial attribute pressure continues. The escalation of the situation in the Middle East has raised concerns about inflation and the risk of economic slowdown, with London zinc prices falling by about 1%, indicating a significant decline in market risk appetite.
Supply side: The current most solid support logic
The processing fee (TC) for zinc concentrate remains at a historically low level, and the pricing of domestic ore in June further declined compared to the previous month. The extremely scarce situation in the mining sector has seriously damaged the profits of smelting enterprises, with processing fees continuously bottoming out and by-product sulfuric acid prices falling. Most smelting plants have already fallen into substantial losses. The passive production reduction forced by this is being realized: the expected increase in centralized maintenance at the domestic smelting end in June has led to a tight output of refined zinc. In addition, LME zinc inventory continues to deplete, providing bottom support for prices.
Demand side: The current biggest suppression factor
With the arrival of the southern rainy season, terminal demand is gradually shifting into the traditional off-season. The operating rate of galvanizing enterprises has decreased, and the operating rate of die-casting zinc alloys has also declined, both at a historically low level. Downstream enterprises generally have a bearish outlook on the future market, maintaining the price of essential needs for procurement and a low willingness to replenish inventory. The terminal consumption sector also lacks highlights: the marginal driving force for the rebound in infrastructure investment growth rate is limited, while the production of automobiles and household appliances has negative growth, the real estate industry remains weak, coupled with a decrease in external demand risk appetite, and overall demand support is insufficient.
comprehensive analysis
The short-term trend has shifted towards weakness, with the market showing a downward trend after high-level fluctuations, but the downward space is constrained by the rigid support of mining shortages and smelting losses. The current market is in a game stage of macro bearish release and fundamental bottom support, and paying attention to 24000 yuan/ton is an important long short watershed. In the medium to long term, in mid to late June, it is important to focus on the substantial realization of the reduction in maintenance and production at the smelting end, as well as whether domestic inventory can continue to decline. These two factors will be the core catalysts for the stabilization and recovery of zinc prices.
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