Zinc prices continued to rise in April
According to the Commodity Market Analysis System of Shengyishe, as of April 9th, the zinc price was 21762 yuan/ton, an increase of 4.46% compared to the fluctuating zinc price of 20832 yuan/ton on April 1st. Long positions in commodities supported the rise in prices in the non-ferrous sector, with zinc prices fluctuating and rising in April.
The colored index rose
According to the Commodity Market Analysis System of Business Society, the non-ferrous index was 1160 points on April 8th, an increase of 27 points from yesterday, a decrease of 24.58% from the highest point in the cycle of 1538 points (2021-10-18), and an increase of 91.10% from the lowest point of 607 points on November 24th, 2015. (Note: The cycle refers to 2011-12-01 present). The non-ferrous sector index has been rising continuously since March 27th, and the non-ferrous sector market has been on the rise, with macroeconomic benefits. The support for the rise in zinc prices in April has increased.
Zinc market supply
There is still no significant increase in mining in the international market. At present, the processing fees for zinc mines in China are low, and the profits of zinc smelters are inverted. There are significant differences in negotiations between smelters and mines on annual processing benchmarks in the international market. Some smelters in the international market have reduced production, while others have undergone maintenance; The domestic production of zinc concentrate has decreased year-on-year, leading to a decrease in the expected supply of zinc in the domestic market.
Zinc market demand
It is expected that the global economic growth rate will decline in 2024 compared to 2023, and the total demand for zinc in the market will remain stable or slightly increase. The domestic real estate market has not yet bottomed out, but infrastructure, household appliances, and automobiles have maintained a certain growth rate. The increment of affordable housing construction, “dual use” public infrastructure construction, and the “three major projects” of urban village renovation have offset the consumption reduction of some real estate, and the support for the increase in demand in the domestic zinc market is limited. Overall, global demand for zinc remains weak.
Macroeconomics
The non farm payroll data in March in the United States grew beyond expectations, with a surge of over 300000 people, the largest increase in nearly a year. However, the unemployment rate has declined, raising doubts in the market about the possibility of interest rate cuts. Coupled with increased geopolitical risks, risk aversion has intensified, and the bullish sentiment in commodities has driven the recent strong performance of the non-ferrous sector; The People’s Bank of China’s monetary policy has once again stimulated stable economic growth and boosted market sentiment. In March, the Purchasing Managers’ Index (PMI) of China’s manufacturing industry was 50.8%, a significant increase of 1.7 percentage points from the previous month. The domestic manufacturing industry has recovered beyond expectations. The macroeconomic situation is favorable, with the non-ferrous metal sector index soaring after the Qingming Festival, and the zinc market being favorable.
Future Market Forecast
Data analysts from Business Society believe that the continuous rise of the non-ferrous sector index in April is beneficial for zinc prices. In terms of supply and demand, the global zinc market is weak in both supply and demand, and the positive support for the zinc market is limited; In terms of macroeconomics, the international and domestic economic recovery exceeded expectations, with many macroeconomic benefits stimulating the rise of the zinc market. In the medium to long term, there is a large potential for new zinc minerals to be added in 2024, and the supply of zinc is sufficient. In terms of demand, although the domestic economic recovery exceeded expectations, the global economic growth rate is still expected to decline compared to 23 years ago, and demand growth is still difficult to sustain. In 2024, the oversupply will continue, and it is expected that the zinc market will consolidate at a low level in the future.
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