As of July 31st, the price of 0 # zinc was 24841 yuan/ton, an increase of 2.05% compared to the zinc price of 24342 yuan/ton on July 1st.
fundamentals
At the macro level, the July Federal Reserve interest rate meeting kept interest rates unchanged, and the weakening of the US dollar index provided pricing support for zinc prices. However, the manufacturing PMI fell to 49.2% in July, and the domestic economic outlook declined, which suppressed expectations for industrial metal demand.
Supply side: The tight mining side is currently the most core bullish factor
The processing fee for zinc concentrate continues to operate at a low level, and the domestic processing fee in July continued to decline compared to June, reflecting that the tight situation on the raw material side has not eased. The dependence on domestic zinc concentrate imports has risen to over 40%, and the sustained low domestic and foreign price ratios have led to import losses expanding to nearly -2000 yuan/ton. The limited inflow of imported ore has further exacerbated the tension in the domestic mining sector. Low processing fees continue to squeeze smelting profits, suppressing the willingness of some smelting enterprises to start production. Domestic refineries are expected to reduce production by the end of the second and third quarters. Due to the expected decrease in smelting production, zinc prices may experience strong fluctuations in the short term.
Demand side: in the traditional off-season of consumption
The operating rate of the galvanizing industry has slightly decreased compared to last week. Downstream acceptance of the current price is limited, and cautious purchasing mentality dominates, with companies only maintaining rigid procurement. The overall inventory of galvanized sheet is high, and there is no significant improvement in terminal orders.
Inventory end
There is a significant differentiation of internal looseness and external tightness: LME zinc inventory continues the pace of destocking, and as of July 31, it has dropped to 99800 tons, providing temporary bottom support for zinc prices; However, the domestic inventory base is relatively high, and there is a huge gap between the internal and external inventory bases, which hinders the transmission path from tight mining to shortage of ingots. Domestic high inventory continues to suppress the upward elasticity of zinc prices.
comprehensive analysis
The zinc price is expected to continue its range oscillation pattern in August, with an expected operating range of 24200-25200 yuan/ton. The support below is solid. The tight mining situation is difficult to reverse in the short term, and the low operation of processing fees will continue to squeeze smelting profits. If the expected production reduction is gradually realized, the supply side will form a substantial tightening. The continuous depletion of LME inventory also provides bottom support for prices. The space above is limited. The high suppression of domestic social inventory, weak demand during the off-season of consumption, and high inventory of galvanized sheet jointly constrain the upward trend of zinc prices.
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