Zinc price in September
According to the Commodity Market Analysis System of Shengyi Society, as of September 30th, the zinc price was 21824 yuan/ton, a decrease of 1.14% from the zinc price of 22076 yuan/ton on September 1st.
In September, the center of gravity of zinc prices in Shanghai once again declined, showing a trend with the middle of the month as the dividing point – maintaining a consolidation trend in the early stage, and then breaking through the level to decline. This is mainly due to the weakening of macro level disturbance factors and the return of market trading logic to fundamentals. The weak trend during the peak consumption season has been confirmed, and the accumulation of inventory has suppressed prices. The domestic zinc ingot market presents a pattern of oversupply, with a weak internal and strong external fundamentals.
In terms of raw materials
In September, the import losses of zinc concentrate continued to intensify, and the import window was almost completely closed. Despite the expected arrival of lock up zinc concentrate and long-term single zinc concentrate at the port in the early stage, it is expected that the quantity of imported zinc concentrate will significantly decrease in October. During September, the price comparison between domestic and foreign markets deteriorated, and the profit loss of imported ore smelting further expanded. As a result, domestic smelters are more inclined to purchase domestically produced ore. At the same time, in order to promote the sales of imported goods, the mining trade has proactively increased the import TC. Looking ahead to October, it is expected that the domestic TC will slightly decrease, while there is still room for an upward adjustment in the import TC.
Supply and demand side
Recently, the market price of zinc has shown a downward trend, which has compressed the profit margin of the smelting industry. However, the profits generated by the by-products in the current smelting process are still considerable, which keeps the profitability of the smelter above 1000 yuan per ton. Therefore, the production enthusiasm of the smelter is still high. In September, some domestic smelters experienced a decrease in refined zinc production compared to previous months due to equipment maintenance. In October, as previously repaired smelters resume production, the supply of refined zinc in China is expected to increase to some extent.
Since the beginning of the month, there has been no obvious sign of recovery in the overall domestic consumer market. Even during the traditional peak consumption season, various consumer data performances are still below expected levels, and market vitality needs to be further stimulated. Based on the current economic situation and consumption trend analysis, it is expected that the domestic consumer market will still be difficult to show significant improvement in October, and the overall situation may remain stable and weak.
Future forecast
Entering October, it is expected that mines in northern China will experience production cuts or shutdowns, which may lead to a decrease in domestic zinc concentrate production. Correspondingly, it is expected that the processing fee (TC) for domestic zinc concentrate will be slightly reduced, while there is still a possibility of an increase in the processing fee for imported zinc concentrate. As the smelter undergoing maintenance in October gradually resumes production, the supply of refined zinc in China may increase. However, it is expected that there will be no significant improvement in the domestic demand for refined zinc consumption.
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