As of August 31st, the price of 0 # zinc was 26235 yuan/ton, an increase of 5.61% compared to the zinc price of 24841 yuan/ton on August 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 core support of the supply side comes from the shortage of mineral resources: currently, the processing fees for domestic and imported zinc concentrates have fallen to historical negative values, with the central China region as low as -2000 yuan/metal ton. This is due to the stable resumption of production in the domestic mineral sector but a significant reduction in imported minerals, resulting in a contraction of total supply. Although spot smelting profits have turned negative, integrated enterprises rely on high mining profits to maintain production. The refined zinc production in August is expected to increase by more than 4% month on month, and only the subsequent decline in sulfuric acid prices may drive refineries to actively reduce production.
Demand side:
In August, the zinc market was in the traditional off-season of summer, with moderate to low operating rates for galvanizing and die-casting alloys. The galvanizing industry continued to suffer from negative profits, which suppressed production enthusiasm. The demand for zinc in the real estate chain was sluggish, and downstream only maintained rigid demand procurement and weak willingness to proactively stock up. Spot prices continued to be discounted, resulting in overall weak demand. At the same time, the market is playing ahead with expectations of a rebound during the “Golden September and Silver October” peak season in September and October. Based on the possibility of infrastructure development in the third quarter, bulls are laying out far month contracts in advance, forming clear expectations for marginal improvement in demand in the future.
Inventory end
Overseas (LME): LME zinc inventory fell to 93250 tons on August 22, the lowest level of the year, with a cumulative decrease of about 25% in the past two months. Overseas tradable spot goods continue to shrink, and supply is extremely tight. Domestic (SHFE): As of August 31st, the zinc inventory of the previous period was 102672 tons, and the domestic supply is sufficient.
comprehensive analysis
The zinc price in September is likely to show a pattern of high volatility and a slight shift in the center of gravity, but domestic high inventory, spot discounts, and technical overbought are suppressing the upper space. The opening of export windows partially alleviates domestic pressure, and the approaching peak season of “Golden September and Silver October” provides marginal improvement expectations. The expected operating range for the main contract of Shanghai Zinc is between 25000-26800 yuan/ton.
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