According to the monitoring of the Commodity Market Analysis System of Shengyi Society, as of February 27th, the price of 0 # zinc was 24642 yuan/ton, a slight decrease of 0.83% from the zinc price of 24438 yuan/ton on February 24th.
The zinc price shows a narrow horizontal oscillation pattern, and the market is stuck in a long short stalemate. At the beginning of the week, prices were slightly under pressure due to inventory exceeding 200000 tons; Although there was cost support during the week, the slow resumption of downstream work resulted in weak upward momentum. Overall, the zinc market has been in a phase of strong supply and weak demand imbalance this week, but the potential for price decline is constrained by smelting costs, exhibiting a typical “top and bottom” characteristic.
Raw material end
The processing fees for imported minerals remain stable, while the supply of raw materials remains tight. In sharp contrast to the accumulation of inventory on the finished product side, the tense situation on the raw material side has not yet eased. This week, the mainstream processing fee for domestic zinc concentrate remained stable in the range of 1200-1500 yuan/metal ton, while the processing fee for imported ore was in a low and fluctuating pattern. Some mines in the northern region have not yet achieved full resumption of production, and coupled with limited supply of imported minerals, the situation of tight raw material supply has not changed. This pattern of “tight supply of raw materials and loose inventory of finished products” has greatly compressed the profit margin of the smelting process, but it also provides solid cost support for zinc prices.
Supply and demand side
The most prominent feature on the zinc supply side this week is the unexpected increase in social inventory, which has become a key factor in suppressing zinc prices. Currently, the social inventory has successfully surpassed the important threshold of 210000 tons. Compared with the same period last year, this inventory level is significantly higher – during the Spring Festival, the cumulative inventory of domestic zinc ingots increased by 49300 tons, and the increase was 12700 tons more than the same period last year. At the same time, the inventory of the previous period also showed a significant synchronous increase. The weekly inventory data released on February 27th showed that zinc inventory increased by 39027 tons this week. In the field of non-ferrous metals, this growth rate ranks among the top, fully reflecting the significant pressure on delivery warehouses to enter the inventory.
The spot trading market remains sluggish. This week, the spot market as a whole showed a significant feature of “active shipment by shippers and cautious procurement by receivers”. Holders of goods generally quote inflated prices while actual transactions are low-key. Even with multiple price cuts and price increases, market transactions remain weak. This “price for quantity” operation fully reflects the urgent willingness of traders to destocking under the pressure of inventory backlog. The recovery pace of downstream industries’ operating rates is slow, and the overall recovery progress is significantly slower than the same period in previous years.
comprehensive analysis
This week, the zinc market is struggling to maintain a balance amidst intense competition between accumulated inventory pressure and cost support. In the short term, the upward trend in prices lacks momentum due to the lack of coordinated cooperation from the demand side, and the downward trend is constrained by cost factors, making it difficult to deeply fall. The volatile pattern may be difficult to break in the short term. From a medium-term perspective, as the traditional consumption peak season approaches in March, if inventory can be smoothly reduced, zinc prices are expected to experience a temporary recovery trend.
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