As of October 30th, the price of 0 # zinc was 25833 yuan/ton, a decrease of 2.37% from the zinc price of 26477 yuan/ton on October 1st.
fundamentals
The domestic zinc market as a whole presents a deep “V” – shaped trend of “first suppression and then rise”, with a significant downward shift in the price center. Affected by lower than expected demand and macroeconomic sentiment in the middle of the month, the price rebounded to 25833 yuan/ton at the end of the month, driven by cost support and buying on dips. Overall, zinc prices have undergone a transition from a unilateral decline to a bottoming out rebound this month, and the market is engaged in a fierce game between the reality of “weak peak season” and cost support.
Supply side:
This month, the overall supply of domestic zinc concentrate remained loose. In the early stage, the import ore window was open, and the raw material inventory of the smelter was abundant, resulting in relatively high processing fees (TC) for domestic and imported zinc concentrates. The strength of processing fees allows smelters to still have a certain profit margin when zinc prices fall, and refined zinc production remains high. Supply side pressure continues to transmit to the ingot side.
However, it should be noted that as the zinc price falls below the 25500 yuan/ton mark, the profits of some high cost smelters and mines are significantly compressed, approaching the breakeven line. The contradiction of “loose mining conditions but absolute prices touching the cost line” triggered a strong cost support effect at the end of the month, with short funds taking profits and driving prices to rebound strongly.
Demand side:
The operating rate of downstream galvanizing, die-casting zinc alloy and zinc oxide enterprises is lower than that of the same period in previous years. Affected by the low funding rate of real estate and infrastructure projects, orders for galvanized structural components are weak; Meanwhile, sluggish overseas consumption has led to a decline in export orders for die-casting alloys. The weak demand side directly leads to the sluggish destocking of social inventory, and holders choose to lower prices to destocking in the second half of the month, which is also the core reason for the accelerated decline in zinc prices in the middle of the month. At the end of the month, as prices fell to relatively low levels, some downstream companies had to replenish their inventory on dips, driving a temporary recovery in transactions and supporting price stabilization.
comprehensive analysis
Looking ahead to November, at the macro level, attention should be paid to the pace of overseas interest rate cuts and the implementation of domestic incremental policies. Fundamentally speaking, as the northern region gradually enters the heating season, there are expectations of environmental restrictions on production in mines and smelters, and the pressure on the supply side is expected to be marginally alleviated. The demand side may return to a flat state after replenishing inventory at the end of the month, but the support near the cost line will become increasingly significant. It is expected that zinc prices will enter a period of wide fluctuations and bottoming out in November, with the main operating range possibly revolving around 25500-26500 yuan/ton. It is recommended to pay attention to the marginal improvement of downstream real orders and the turning point of social inventory.
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