As of May 25th, the price of 0 # zinc was 24814 yuan/ton, an increase of 0.93% from the zinc price of 24586 yuan/ton on May 18th.
| Gamma-PGA (gamma polyglutamic acid) |
fundamentals
The core operating characteristics of zinc prices this week are “suppression at the top and support at the bottom”: the upper part is suppressed by the off-season of terminal consumption and high social inventory, resulting in insufficient upward momentum; Relying on the shortage of raw materials in the mining sector and the expectation of reduced smelting production, there is strong support below, and there is no room for a deep pullback overall, maintaining a high volatility pattern throughout the process.
supply side
This week, the supply side contraction logic of the zinc market continued to strengthen, becoming the core support for zinc prices, and multiple high-frequency data confirmed the deepening of the shortage pattern of raw materials. One reason is that the processing fee for zinc concentrate continues to bottom out, with domestic TC falling to 400 yuan/metal ton and imported TC falling to -56.25 US dollars/dry ton, both at historical lows. The profits of smelters have significantly narrowed or even fallen into losses, and production enthusiasm has been dampened. Expectations of reduced maintenance and production have also increased. Secondly, the inventory of raw materials is accelerating its decline. The domestic zinc ore inventory days are less than 20 days, and the port imported ore inventory is synchronously decreasing. The raw material reserves of smelters are tight, which directly restricts the space for increasing refined zinc production. It is expected that the domestic refined zinc production in May will decline month on month. The third is the superposition of overseas supply disturbances, with the production reduction caused by the Gajamarquilla zinc refinery fire in Peru, and the marginal tightening of overseas zinc ingot supply, further strengthening the expectation of mineral shortage.
However, the short-term supply of refined zinc spot is still relatively abundant. Smelting enterprises have only slightly reduced production this week, and there has been no centralized maintenance. The supply contraction has not yet been transformed into a significant destocking of spot, which is currently more reflected in emotional and expected support.
Demand side
Since mid May, domestic zinc consumption has officially entered the traditional off-season, and the downstream sector’s operating rate has synchronously fallen, forming a clear bearish pressure on the demand side, which is the core reason why zinc prices are difficult to break through the upward trend.
comprehensive analysis
Based on the overall trend of the long short game of fundamentals and the fluctuating characteristics of the technical range, it is expected that the short-term zinc price will continue to fluctuate at a high level with a weak trend, showing a dilemma of range operation and rise and fall, and there is currently no unilateral directional market. The current market lacks clear trend signals, and it is recommended to focus on interval operations, supplemented by a wait-and-see strategy.
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